France: Economic growth revised up
March 25, 2011
According to revised data released on 25 March, fourth quarter GDP increased a seasonally adjusted 0.4% over the previous quarter, which was a notch above the 0.3% expansion reported in the first estimate released on 15 February. The figure beat market expectations which had growth at 0.3% and doubled the revised 0.2% increase (previously reported: +0.3% quarter-on-quarter) recorded in the third quarter. On an annual basis, the economy expanded 1.5% in the fourth quarter, down from the 1.7% annual rise recorded in the previous quarter. For the full year 2010, GDP expanded 1.5%, partially recovering from the 2.5% contraction registered in 2009, which had marked the sharpest drop since World War II. The stronger quarterly result was mainly due to a downward revision of third quarter data, which provided a favorable base effect for the fourth quarter reading. That said, the fourth quarter expansion was driven by an improvement in household consumption and exports, which offset a negative contribution from inventories. Private consumption rose 0.9% over the previous period (Q3: +0.5% quarter-on-quarter), while gross fixed investment rose 0.3%, an inch below the 0.5% expansion in the third quarter. In addition, the net contribution from the external sector to overall growth rebounded from minus 0.4 percentage points in the third quarter to plus 0.6 percentage points in the fourth, as exports of goods and services expanded 1.0% while imports contracted 1.2%. In contrast, the contribution from inventory changes swung from plus 0.2 percentage points in the third quarter to minus 0.9 percentage points. INSEE expects the economy to expand 1.3% this year, according to its quarterly economic outlook from December. French Economy Minister Christine Lagarde maintained the government's 2011 economic growth target of 2.0%.