France: Economy steams ahead in the first quarter
May 13, 2011
In the first quarter, GDP increased a seasonally adjusted 1.0% over the previous quarter, the largest increase since Q2 2006, according to the first estimate released by the National Institute of Statistics and Economic Studies (INSEE, Institut National de la Statistique et des etudes economiques). The reading was well above 0.3% increase recorded in the fourth quarter as well as market expectations, which had the economy expanding 0.6%. On an annual basis, the economy grew 2.2% in the first quarter, up from the 1.4% annual rise recorded in the previous quarter. The first quarter expansion was driven by an improvement in domestic demand and a positive contribution from inventories, which compensated for a dragging external sector. Private consumption rose 0.6% over the previous period (Q4: +0.4% quarter-on-quarter), while gross fixed investment rose 1.1%, well above the 0.5% expansion observed in the fourth quarter. Moreover, the contribution of inventory changes swung from minus 0.3 percentage points in the fourth quarter to plus 0.7 percentage points. In contrast, the net contribution of the external sector to overall growth deteriorated from a 0.3 percentage points contribution in the fourth quarter to a detraction of 0.4 percentage points in Q1, as imports outpaced exports. Exports of goods and services rose 1.4% while imports expanded a more marked 2.7%. INSEE expects the economy to expand 1.6% this year, according to its quarterly economic outlook from March. French economy Minister Christine Lagarde maintained the government's 2011 economic growth target of 2.0%.