French 3Q growth beats expectations, domestic demand supports

French economic growth defied expectations for a modest slowdown in the third quarter, expanding instead at the same 0.3 percent pace from the previous quarter, the INSEE national statistics office said on Wednesday.

The resilience in French gross domestic product will be good news for President Emmanuel Macron, at a time of concerns about a global slowdown brought about by international trade disputes which have hit the nation’s main trading partner Germany hard.

A poll of analysts surveyed by Reuters had forecast 0.2 percent growth for the euro zone’s second-largest economy in the three months to end-September.

Philippe Waechter, an economist at Ostrum Asset Management, said growth was supported by the government’s injection of public funds to boost households’ spending power.

“This is important in a risky international context,” he said.

Domestic demand was the main driver of growth, adding 0.5 points in the third quarter, while trade subtracted 0.4 points and inventories made a small 0.1 point contribution.

French households’ spending picked up, growing at a 0.3 percent pace in the third quarter after expanding 0.2 percent in the previous three months, while business investment slowed to an increase of 0.9 percent this quarter from a 1.2 percent gain.

The negative contribution from trade reflected a faster increase in imports than exports.