French GDP growth tops expectations

PARIS: France’s economy defied forecasts for a slowdown in the third quarter after the government injected billions of euros of stimulus, boosting consumer demand and offsetting a slump in trade that could yet push neighbouring Germany into recession.

The resilience in French gross domestic product, which expanded 0.3%, will be good news for President Emmanuel Macron at a time of concerns about the impact of international trade disputes on the global economy.

It may also back up the view of the French government and others, including incoming European Central Bank president Christine Lagarde, that Germany should follow Paris’s example and spend more to support its economy.

Analysts surveyed by Reuters had forecast 0.2% growth for the French economy, the euro zone’s second largest, in the three months to the end of September.

Many forecasters expect Germany, the largest economy in the bloc and France’s main trading partner, to have slipped into recession in the same three months by logging its second successive quarter of contraction.

Export-driven Germany is much more reliant on trade than France, whose economy was given an additional fillip by Macron’s decision to announce €10 billion in budget measures to quell the so-called yellow vest crisis earlier this year. Most of that money went on boosting benefits for minimum-wage earning workers.

Domestic demand was the main driver in the last three-month stretch, adding 0.5 percentage points to growth, while trade subtracted 0.4 points.

Household spending picked up, growing at a 0.3% pace in the third quarter after expanding 0.2% in the previous three months, while business investment slowed to an increase of 0.9% this quarter from a 1.2% gain in April-June.