France: Economy records moderate growth in Q2
GDP reading: GDP growth was stable from Q1 at 0.3% on a seasonally adjusted quarter on quarter basis in the second quarter. The reading was slightly above market expectations and in line with the Euro area average. Stronger readings for private spending and investment were offset by a softer rise in government spending and a weaker contribution from net exports. On an annual basis, economic growth lost steam, cooling to 1.1% in Q2 from the previous period’s 1.5% expansion.
Drivers: Household spending recorded zero growth in the second quarter, which was above the first quarter’s 0.1% contraction. Government spending rose 0.3% (Q1: +0.6% s.a. qoq). Meanwhile, fixed investment bounced back, growing 0.1% in Q2, contrasting the 0.4% decrease in the prior quarter. Exports of goods and services increased 0.6% on a seasonally adjusted quarterly basis in the second quarter, which was below the first quarter’s 0.7% expansion. Conversely, imports of goods and services flatlined in Q2 (Q1: -0.3% s.a. qoq).
GDP outlook: In Q3, the economy should get a boost from the Olympics; the statistics office recently estimated that the Games could boost economic activity by 0.3 percentage points in the quarter. However, political uncertainty following the inconclusive snap parliamentary elections will likely tame investment.