2023-04-28 06:27:23
A rebound in exports helped French output expand by 0.2 per cent over the first three months of this year, underlining the resilience of the eurozone’s second-largest economy following several weeks of strikes.
Foreign sales of goods and services rose by 1.1 per cent, helping to compensate for weak consumer spending following months of industrial action. Imports also fell 0.6 per cent, meaning trade provided a substantial lift to the economy.
The acceleration was in line with analysts’ expectations and indicates the economy of the 20-country currency zone is proving more robust than expected following Russia’s invasion of Ukraine raised fears of an energy crisis.
Analysts think the strength of eurozone growth and inflation figures published today and early next week might decide whether the European Central Bank keeps raising interest rates by half a percentage point or slows to a quarter point move.
Insee, the French statistics agency, said business investment was weaker in the first quarter while household spending was flat.
Internal demand was negative for the second consecutive quarter, even before inventory changes, which further weighed on growth. French goods consumption fell 0.2 per cent in the first quarter, Insee said.
Widespread strikes in protest over pension reforms have brought French public transport to a standstill. The French central bank said earlier this month that industrial action hit activity in transportation and storage sectors as well as food services.
Gilles Moëc, chief economist at French insurer Axa, said previous strikes were estimated by Insee to cause no more than a temporary 0.2 percentage point hit to gross domestic product, adding that previous disputes had been more disruptive.
The French economy rebounded faster than most European countries from the impact of the pandemic, boosted by generous government support. But it has underperformed since last year when it grew 2.6 per cent compared with the eurozone’s 3.5 per cent growth.
“In 2022 France was protected, relative to countries such as Germany, by its lower sensitivity to energy prices and Chinese demand,” said Moëc.
Energy costs have fallen sharply since the start of the year, while China has reopened its economy, easing pandemic-era restrictions. Moëc predicted that if these trends continued French growth “would probably converge” with other euro area countries.
Earlier this month the IMF forecast the French economy would grow 0.7 per cent this year and 1.3 per cent next year, slightly underperforming the wider eurozone.
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