France’s GDP growth beats expectations

France’s economy grew by 0.3 per cent in the second quarter of 2024, matching the revised growth rate of the first quarter and surpassing economists’ forecast of 0.2 per cent, according to statistics agency Insee.

This stronger-than-expected performance provides a glimmer of resilience ahead of anticipated regional data, which is expected to show a slight slowdown in growth across the euro area, including weaker performance in Italy, Spain, and Germany.

Despite ongoing challenges from the energy crisis, weak industry, and goods exports, France’s growth was bolstered by a rise in exports and a modest increase in investment, while consumer spending remained stable.

The European Central Bank (ECB) has cautioned that growth in 2024 will likely be subdued, influenced by global economic weaknesses and potential trade tensions.

Recent data showed mixed results for the eurozone, with Ireland’s economy accelerating and Belgium continuing to expand. Inflation data for Spain and Germany will be released later on Tuesday, with eurozone figures due on Wednesday forecast to hold steady at 2.5 per cent, above the ECB’s 2 per cent target.

France’s GDP figures reflect the economic climate prior to President Emmanuel Macron’s announcement of a snap election on June 9, just before the end of the second quarter.

The subsequent surge in business uncertainty and the lack of a clear parliamentary majority could shadow the economic outlook. Macron has left a caretaker government in place while waiting to appoint a new prime minister.

Insee projects that France will see a temporary boost from the Paris Olympics this summer, with expected growth of 0.5 per cent in the third quarter, though a slight contraction is anticipated in the final months of the year.

Attribution: Bloomberg.