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French Economy Grows in Third Quarter, Still Disappoints

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The French economy grew by 0.2 percent in the third quarter of the year, which was an improvement on the previous quarter, but a disappointment to many analysts. The economy shrunk by 0.1 percent in the second quarter, so the increase is good news for the future. Year on year, GDP was up by 1.1 percent, which is worse than the 1.3 percent for the second quarter. The market expected an increase of 0.3 percent from quarter two. French exports were up by 0.6 percent, better than the 0.2 percent growth in the second quarter. Imports had also gone up, by 2.2 percent, a big swing from the 0.7 percent fall the previous quarter. Inflation for the month of October was 0.5 percent, though many expected it to be 0.6 percent.

The French economy has been hampered by reduced income from tourism, following the terror attacks. The July 14 terror attacks in Nice occurred in the middle of the tourist season. Consumer spending is also lower than expected, while business investments continue to wane. The country profited from an increase in the value of the Euro, though the fall in pound sterling has left many analysts wondering if the U.K, one of France’s largest trading partners, will be able to maintain its demand for French exports. According to national data agency Insee, household spending was mute at a zero percent increase, matching the second quarter. Companies reduced their investments for the quarter by 0.3 percent, for the second consecutive 3-month period. President Francois Hollande’s promise of a stronger economy don’t seem to be working out, and this is certain to affect his re-election, if he chooses to run again. The country’s finance minister, Michel Sapin, said the lower than expected growth means the government’s predicted growth of 1.5 percent for the year won’t be attained.

 

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