World Economy

France Q1 Growth Revised

France Q1 Growth RevisedFrance Q1 Growth Revised

The French economy grew by a stronger than expected 0.6% in the first quarter, official data showed Monday, driven by a surge in consumer spending and a pick-up in business investment.

The brisker growth figures, which augured well for the government’s 1.5% target for the full year, were the latest positive developments for the eurozone’s second-largest economy, RTE reported.

French unemployment has finally started to decline and consumers are more optimistic despite strikes and protests.

A poll of 15 analysts surveyed by Reuters had forecast French gross domestic product to remain at the 0.5% that INSEE had initially reported in its preliminary estimate.

With the revised figure, it was only the second time in three years that growth came in above 0.5% in France.

Growth in the quarter to the end of March was driven by a 1% surge in consumer spending, with INSEE revising sharply upward its March figure in a separate release, and a 1.6% increase in investment.

The strong increase in domestic demand offset a negative contribution from international trade, which shaved 0.2 percentage points off first-quarter GDP, although that was less than the 0.6 points it subtracted in the fourth quarter.

Analysts say President Francois Hollande’s 1.5% target for the full-year seems all but assured, barring any nasty surprise during the rest of the year.

Since the onset of the financial crisis in 2008, the French economy has grown by about 3%, compared with 6% for Germany, 8% for the UK and 10% for the US.

Meanwhile, France’s budget deficit is running at 3.5% of GDP, and the ratio of public debt to GDP is 96%, and still climbing.