French economic growth stalls in Q2, consumer spending slows sharply

The French GDP growth stalled in the second quarter of 2016, confirming the first estimate, according France’s official statistics office INSEE. The economic growth of France remained stable at 0 percent in volume terms following a 0.7 percent growth registered in the first quarter. The subdued reading is mostly attributed to the sharp slowdown in household consumption expenditure and fall in total gross fixed capital formation.

Household consumption expenditure slowed to 0 percent in second quarter, following a 1.2 percent growth in first quarter, while investment fell 0.2 percent following a growth of 1.3 percent. Overall, final domestic demand, excluding inventory changes, was stable, contributing 0.1 percentage points to the GDP growth, as compared with the 1 percentage point contribution in the first quarter, stated INSEE. Government spending remained stable in the second quarter at 0.4 percent.

Meanwhile, imports dropped sharply by 2 percent, whereas exports remained nearly flat at -0.1 percent. Therefore the foreign trade balance positively contributed to the second quarter GDP growth. It added 0.6 percentage points. In contrast to this, changes in inventories were a drag on the growth, negatively contributing 0.7 percentage points.