France GDP Expands More Than Expected
October 30 2019 - 1:35AM
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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
is forecast to grow only 0.5 percent this year.
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