World Economy

France’s Q4 GDP Growth Doubles

France’s Q4 GDP Growth DoublesFrance’s Q4 GDP Growth Doubles

France’s economy expanded at a faster pace, as estimated, in the fourth quarter driven by consumption and investment, the second estimate from the statistical office Insee showed Tuesday.

Gross domestic product grew 0.4% sequentially, following a 0.2% expansion seen in the third quarter. The Insee confirmed the first estimate published on January 31, RTT reported.

Household consumption advanced 0.6% and government spending by 0.4%. Growth in gross fixed capital formation doubled to 0.4% from 0.2%. Exports and imports climbed 1.3% and 1%, respectively. As a result, net trade contributed 0.1 point to growth. Conversely, changes in inventories contributed negatively by 0.1 points.

On an average, GDP expanded 1.1% in 2016 after rising 1.2% in 2015. The annual figures also matched preliminary estimate.

France’s inflation slowed marginally in February, preliminary data from Insee showed. Month-on-month, consumer prices edged up 0.1%, reversing a 0.2% fall in the prior month, but slower than the expected growth of 0.4%. This slight increase came from a rebound in services prices and an increase in tobacco prices.

Meanwhile, according to data provided by Markit Economics, the flash Markit France manufacturing purchasing managers’ index stood at 52.3 in February compared to 53.6 in January 2017. The figure met market estimates of 53.5, Market Realist reported.

France’s October manufacturing PMI expanded for the first time after contracting for seven consecutive months. A level above 50 indicates expansion in the economy, while anything below 50 indicates contraction. February manufacturing PMI showed weaker improvement. However, the January manufacturing PMI report showed the highest improvement since June 2014.

The weaker improvement in France’s manufacturing PMI was mainly due to the following: Production volume and output rose at a slower rate in February 2017 as compared to January 2017. Export orders and new orders also rose at a slower rate. Employment growth also showed a modest improvement.

The iShares MSCI France ETF, which tracks France’s performance, fell 0.7% in February 2017. The Vanguard FTSE Europe ETF, which tracks Europe’s IEV and EZU economic performance, fell 0.1% in February 2017.

The economy is showing gradual improvement after the Brexit shock in June 2016. The manufacturing PMI figures suggest that domestic demand is improving gradually though there was a slight fall in February’s manufacturing PMI.

France has taken gradual steps aimed at reforming its economy over the last decade, helping to underpin a recovery that is now taking root, even if opposition politicians say it is too little too late.

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