The French economy grew less than had been expected in the third quarter of the year showing the eurozone’s economic recovery remained modest in the three months through September.
The French economy was weighed down by prolonged weakness in consumer spending, declining business investment and a drag on tourism from terror attacks, RTT reported.
The eurozone’s second-largest economy grew 0.2% in the third quarter from the second, when it contracted 0.1%, national statistics agency Insee said Friday. Economists polled by The Wall Street Journal had forecast a 0.3% rise quarter over quarter.
In France, the July 14 terror attack in Nice was a major blow for the country’s tourism industry, just ahead of what is usually peak season. With domestic demand uncertain, the UK’s vote to leave the EU and volatile swings in British sterling have added questions over demand from one of the eurozone’s major trading partners.
French consumers—the main pillar of economic growth in the country—were hesitant in the third quarter, Insee’s data indicates. Household spending over the period recorded zero growth, as in the second quarter.
French companies too dragged on economic growth by cutting their investment 0.3% quarter-over-quarter for the second quarter in row. And net trade took 0.5 percentage points off growth as a rise in imports outpaced export growth.
The weak growth is a further setback for embattled President Francois Hollande, who has pinned his political future to an economic upturn driving down unemployment. The Socialist leader says he will decide by the end of the year whether he will seek re-election in May 2017 and won’t do so if unemployment isn’t on a downward path.
French Finance Minister Michel Sapin said the weaker-than-expected economic growth would make it difficult to reach the government’s 1.5% growth target this year. But the figures don’t undermine targets for public finances and employment, he added.
The fall in tourism has sent revenues tumbling in France’s hotel and restaurant industry. French hotels group AccorHotels said last week that its revenues in the capital dropped around 30% in the third quarter.
