France: Economic growth accelerates amid strong domestic demand
November 15, 2011
According to preliminary data released on 15 November, third quarter GDP expanded 0.4% over the previous quarter. The reading contrasted the revised 0.1% contraction (previously reported: 0.0% quarter-on-quarter) recorded in the second quarter, but was in line with market expectations. On an annual basis, the economy expanded 1.6% in the third quarter, unchanged from the previous quarter. GDP rebounded in the third quarter mainly on the back of improving domestic demand. Private consumption expanded 0.3% over the previous period (Q2: -0.8% qoq), while gross fixed investment rose 0.4%, slightly below the 0.6% expansion observed in the previous quarter. Meanwhile, the contribution of inventory changes swung from minus 0.2 percentage points in the second quarter to zero in the third. In contrast, the external sector's net contribution to overall growth deteriorated from plus 0.5 percentage points in the second quarter to plus 0.1 percentage points in Q3, as imports rose more markedly than exports. Exports of goods and services expanded 0.7% (Q2: +0.5% qoq), while imports rebounded from a 1.2% contraction in the second quarter to a 0.3% expansion. INSEE expects the economy to expand 1.7% this year, according to its quarterly economic outlook released in October, which is in line with the government's forecast of 1.75%. For next year, the government expects economic growth to slow to 1.0%.