French Q1 Growth Surges Boosted by Consumer Spending, Investment Rise

07 May, 2024

French Q1 Growth Surges Boosted by Consumer Spending, Investment Rise

The French economy exhibited stronger growth momentum than anticipated in the first quarter, attributed to a notable uptick in both consumer spending and business investments, as per official data released on Tuesday.

According to the quarterly GDP report by statistics agency INSEE, growth in France's economy expanded by 0.2 percent during the initial three months of the year, following a 0.1 percent growth in the previous quarter of 2023.

Expectations were surpassed, with economists foreseeing a 0.1 percent growth on average, while the Bank of France and INSEE had projected 0.2 percent growth and flat growth, respectively.

This positive growth trajectory signals a reassuring development for the government, particularly amid prior criticism over its economic management. Finance Minister Bruno Le Maire emphasized the improving growth trend highlighted in INSEE's GDP report.

Consumer spending, a key driver of French economic activity, accelerated to 0.4 percent growth from 0.2 percent in the preceding quarter, coinciding with a rebound in business investments by 0.5 percent following a contraction at the end of the previous year.

Economists anticipate further economic revival throughout the year, propelled by factors such as increased consumer purchasing power due to lower inflation and heightened investment stimulated by interest rate adjustments. Additionally, INSEE reported stable inflation at 2.4 percent in April, a positive indicator amidst Europe's inflation challenges.