Is France Finally Turning a Corner?

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Higher than expected growth? This doesn’t sound like the France we’ve come to know over the last 6-7 years. Figures are up but nobody is talking about corners being turned just yet.

In the third quarter of last year, the French economy grew by 0.3% – a little better than predicted. For Michel Sapin – Minister for Finance – the objective of 0.4% annual growth is looking good at least.

After a contraction of 0.1% in the second quarter, France posted growth of 0.3%, according to figures released last Friday by national bean-counters INSEE. The news was tempered by the fact that GDP figures were down by 0.1% but it represents the strongest economic growth in France since Spring of last year.

The Central Bank of France was only expecting 0.2% growth and various other economists in France and elsewhere were predicting even worse figures – with particularly pessimistic vibes emanating from Anglo-American analysts.

Finance Minister Michel Sapin (as opposed to the Minister for the Economy Emmanuel Macron) estimated that the government provision for growth of 0.4% in 2014 was “probably assured” but believes that economic activity remained “too weak”. The government figures had been revised in September to 0.4%, down from 1% previously.

“Aside from fitful starts of activity from one quarter to the next, economic activity has generally picked up but it remains too weak to create the jobs that our country needs,” indicated the Minister.

The devil in the detail is worth analysing, however. While confidence in the economy remains down (public and private investment dropping by 0.6% again in the 3rd quarter), the fact is that this little surge of growth came from an increase in household consumption (up 0.2%) and an increase in consumption from public bodies (up 0.8%).

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