September 25, 2015

More complete data released by the statistical office (INSEE) confirmed that the French economy stagnated in the second quarter of 2015. In Q2, GDP recorded seasonally-adjusted flat growth over the previous quarter, which came in below the 0.7% expansion seen in Q1. The reading was the lowest in a year and undershot market expectations of 0.2% growth. Year-on-year, GDP accelerated from a 0.9% rise in Q1 to a 1.1% expansion in Q2, which marked a two-year high.



The second quarter’s stagnation was mainly the result of weak domestic demand. Private consumption tallied zero growth in Q2, which was below the 0.8% rise recorded in Q1. Government spending increased 0.4% in Q2, mirroring Q1’s result. Meanwhile, gross fixed investment contracted 0.2% in Q2 (Q1: 0.0% quarter-on-quarter).



On a bright note, the external sector jumped to a positive contribution as exports of goods and services accelerated to a 2.0% rise over the previous quarter in Q2 (Q1: +1.5% qoq), while imports increased only 0.5% (Q1: +2.1% qoq). As a result, the external sector’s net contribution to overall economic growth swung from minus 0.2 percentage points in Q1 to plus 0.4 percentage points in Q2.

FocusEconomics Consensus Forecast panelists expect the economy to grow 1.0% in 2015, which is up 0.1 percentage points from last month's forecast. For 2016, panelists forecast economic growth at 1.4%.