C oup stop for the pessimists, simple hiccup for optimists. The growth of the French economy was sluggish in the second quarter according to a second estimate published Friday by INSEE. An increase of 0.3% of gross domestic product was expected.
The carryover equivalent to the annual GDP growth in case of zero growth in the last two quarters was 1.1%, according to INSEE.
This sluggish growth, which confirms an initial assessment published last month, slice on the first quarter particularly dynamic (+ 0.7%), highlights the statistical Institute. It is explained by a slowdown in consumer spending, but also by a decline in investment and production, affected by social movements against the Labour Law.
The aftermath of the Euro 2016
Between April and June, capital expenditures were thus down 0.2% after rising 1.3% in the first quarter. According to INSEE, the decline affected both the construction sector (-0.5%) and market services (-0.4%). traditional engine of growth in France, spending on household consumption stagnated for them (0%), compared to an increase of 1.2% in the previous quarter.
This has touched both goods (+ 0.1% after + 1.5%) and services (-0.1% after + 0.7%), explains the institute. He attributes it to “a backlash after buying tickets for Euro 2016 football in the first quarter.” Production was down 0.1%, including a drop in the manufactured goods sector (-0.9%), “mainly due to the fall in production in refineries affected by social movements in May and June. “
The government is targeting 1.5% growth on the year
These poor results could complicate the task of the government, which has built its budget on a 1.5% growth assumption in 2016.
Thursday, Manuel Valls said the government maintained this growth target 1.5%. In this perspective, “we need growth in the third and fourth quarter. We feel that there are, “said the Prime Minister. Valls also announced a reduction in income tax.
In its monthly report published mid-June, INSEE forecast growth of 0.3% in the third quarter and then 0 , 4% in the fourth. The Bank of France (BoF) provides it a rebound of 0.3% in the third quarter, for an annual growth of 1.4%.