World Economy

France Sees Modest Growth

France’s economy may continue to firm in the second half of the year.France’s economy may continue to firm in the second half of the year.

The French economy continued growing at a modest clip in the second quarter after Emmanuel Macron was elected president in May, a second reading on gross domestic product showed.

Eurozone’s second-biggest economy grew 0.5% in the second quarter from the first, according to official data, matching both a previous estimate and economists’ expectations. It was the third month in a row that French GDP climbed at that pace, news outlets reported.

The rate of household consumption expenditure rose to 0.3%, from 0.1% in the previous quarter. Exports also rose 2.5%, bucking–at least for now–expectations that a stronger euro will eat into the country’s trade, statistics agency Insee said Tuesday.

Consumer spending rose 0.7% month-on-month and 2.1% year-on-year in July, Insee reported. Economists polled by the Wall Street Journal had forecast only a 0.4% rise on month and 1% on year.

Insee also revised the consumer spending figures for June to a 0.7% decline from 0.8% previously, Reuters said.

The stronger-than-expected rebound indicates the French economy may continue to firm in the second half of the year after a strong performance in the first six months. In the quarter ending June, the economy grew 0.5% on quarter, the same pace as the previous two quarters.

Consumer spending figures for July showed particularly strong gains in spending on clothing and home furnishings. Energy consumption declined.

 Showdown in the Offing?

The unions are threatening national strikes and blockades. A growing number of critics are warning that France is a “powder keg” waiting to blow. After an unconvincing summer, in which his popularity has plummeted, crunch time for Emmanuel Macron has arrived. The new French president is facing the prospect of a September standoff in the streets over his controversial plans to revamp the labor laws.

In his election manifesto Macron pledged to use a special presidential decree to force through measures making it easier, among other things, for employers to hire and fire.

He has a clear parliamentary majority, so the biggest menace to Macron’s plans comes from the unions and the street. The CGT trade union has called for a day of “action and strikes” on 12 September; Jean-Luc Melenchon, leader of the hard-left party La France Insoumise has called for a “day of action” two weeks later.

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