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Financial News: France GDP Expands More Than Expected

France GDP Expands More Than Expected

10/30/2019 - 05:35:00 (RTTNews)

(RTTNews) - France's economy expanded more than expected in the third quarter on household spending and investment, while its major counterpart Germany is forecast to enter a mild recession.

Gross domestic product climbed 0.3 percent sequentially, the same pace of growth as seen in the second quarter, the first estimate from the statistical office Insee showed Wednesday.

Economists had forecast GDP to grow at a slightly slower pace of 0.2 percent.

The expenditure-side breakdown of GDP showed that growth in household spending improved to 0.3 percent from 0.2 percent, while growth in gross fixed capital formation decelerated to 0.9 percent from 1.2 percent.

Overall, final domestic demand excluding inventory changes contributed 0.5 points to GDP growth.

In a separate communique, the Insee said household consumption expenditure on goods decreased 0.4 percent due to a 1.3 percent fall in manufactured good spending.

Imports rebounded in the third quarter, up 1.4 percent after falling 0.3 percent and exports grew 0.3 percent after a 0.1 percent drop. Consequently, the foreign trade balance contributed negatively to GDP growth, by -0.4 points.

Further, changes in inventories contributed positively to GDP growth by +0.1 points in the third quarter.

The big picture is that the French economy will be growing at a pretty sluggish pace over the next year or so amid a global and European downturn and tighter fiscal policy at home, Jessica Hinds, an economist at Capital Economics, said.

The economist expects annual GDP growth to slow from around 1.2 percent this year to 0.8 percent in 2020.

The International Monetary Fund forecast France to grow 1.2 percent in 2019 and 1.3 percent in 2020. Meanwhile, the German GDP to grow only 0.5 percent this year.

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