France’s GDP rose by 0.5% q/q during the second quarter of 2017, according to seasonally-adjusted figures released by the INSEE. The economy had grown by the same magnitude during the first three months of the year.
Net foreign trade was the main driver of growth during the second quarter, adding 0.8 percentage point to the total change in demand, as exports rebounded strongly. Domestic demand, excluding stocks, also made a positive contribution. Internal demand was boosted by a new increase in investment spending (although it decelerated compared to the first quarter) and a modest acceleration in private consumption.
The figures show France’s economy posting solid growth during the second quarter and support our view that GDP is likely to grow by around 1.6% in 2017. This would be the strongest performance in six years.
We expect growth to remain healthy during the second half of the year, boosted by gradually improving labour market situation, muted inflation and solid external demand. Confidence indices suggest that firms and households are also more upbeat about the economic outlook, which should also help to support domestic demand.
Investment spending should also be supported by favourable credit conditions and improving demand levels during the second half of 2017.
The French economic recovery seems to be well stablished, but there are still risks on the horizon. Although hopes for the implementation of reforms – particularly on the fiscal and labour market fronts – are high, the risk of the government not delivering as expected is not negligible, despite its large majority in the National Assembly.
Today’s growth figures should cheer France’s new leader, says Mehreen Khan of the FT.
She writes:
The official figures will be a boon for president Macron who has vowed to overhaul the French economy after years of lagging behind its major eurozone rival, Germany.
Unemployment in France is now at its lowest since the eurozone crisis, inflation has been tamed, and business surveys are revealing the best confidence levels in a decade.
Breaking: France’s economy grew by 0.5% in the second quarter of 2017.
That matches economists’ forecasts, and outpaces Britain’s 0.3% growth in the last three months.
It means that France’s economy has now grown steadily for the last year, and by 0.5% per quarter for the last nine months. That’s a pretty solid performance.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We get two key piece of economic data this morning – new growth figures from France and America.
Together, they’ll help us to see how the global economy performed in the second quarter of this year. Economists expect that both countries grew fairly solidly, with French GDP tipped to rise by 0.5% and America’s by around 0.7% (or 2.7% on an annualised basis).
We also find out how Canada’s economy performed in May.
It’s also another busy morning for financial news. Barclays bank, telecoms group BT, airline operator IAG and online estate agent Rightmove are among those reporting results.
The agenda:
6.30am BST: French GDP for the second quarter of 2017
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