France: GDP growth records fastest upturn since Q4 2023 in the third quarter
GDP reading: GDP growth improved moderately to 0.4% on a seasonally adjusted quarter on quarter basis in the third quarter, up from 0.2% in the second quarter and marking the best result since Q4 2023. Q3’s reading was slightly above market expectations and the Euro area average. The Olympic and Paralympic Games in Paris gave the economy an artificial boost, as broadcasting rights and ticketing sales lifted private consumption of services. On an annual basis, economic growth improved to 1.3% in Q3, compared to the previous period’s 1.0% increase.
Drivers: Looking at expenditure components, private consumption increased 0.5% in the third quarter, which was above the second quarter’s flat reading. Around half of this growth was attributed to the effect of the Olympics. Government consumption saw a 0.5% expansion in Q3 (Q2: +0.5% s.a. qoq). Meanwhile, fixed investment contracted 0.8%.
On the external front, exports of goods and services contracted 0.5% in Q3. (Q2: +0.5% s.a. qoq). In addition, imports of goods and services deteriorated, contracting 0.7% in Q3 (Q2: +0.1% s.a. qoq). The net effect was that the external sector contributed positively to GDP.
GDP outlook: The economy is projected to slow to a halt in Q4 as the Olympics boost disappears. That said, looser monetary policy should provide some support to activity.