A brake on French growth

Posted Oct 28, 2022, 8:05 AMUpdated on Oct 28, 2022 at 8:56 am

Growth is struggling in France. GDP rose by a modest 0.2% in the third quarter after increasing by 0.5% in the previous three months, according to data published this Friday morning by INSEE.

Although this figure was expected, it nevertheless marks a marked slowdown in the tricolor economy. “The growth overhang for 2022 is 2.5%,” said INSEE chief economist Julien Pouget in a tweet. This corresponds to the government’s objective for the year. In its latest economic report, the statistical institute expects zero growth in the last quarter.

Sluggish consumption, dynamic investment

While inflation continues to race ahead, even exceeding 6.2% in October, household consumption, the main driver of GDP growth in France, was completely sluggish (+0% ). At half mast since the start of the year, purchases of goods recorded a further decline of 0.5%, in volume, this summer. This, despite a rather encouraging month of September when spending increased by 1.2%, driven by spending on energy and capital goods. On the other hand, the surge in prices led households to reduce their food expenditure (-0.7%).

The pleasant surprise nonetheless comes from investment, which continued to accelerate, up 1.3% driven by the manufacturing sector. On the other hand, foreign trade contributed negatively to growth: hit by the global slowdown, exports suffered the blow for the third consecutive quarter, up by only 0.7%, while imports remained sustained (+1, 9%) driven by purchases of electricity and capital goods.

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