French Economic Growth Stagnates

Consumer spending growth slowed sharply from a 0.9 percent increase in the first quarter to a 0.1 percent rise in the second quarter, much of which was due to lower spending on energy amid higher temperatures.

French economy stagnated in the three months ended June, defying economists’ expectations for an expansion, preliminary figures from the statistical office Insee showed Friday.

The French numbers kick off a morning of eurozone GDP figures that are expected to show little to no improvement in the currency bloc’s economic growth rate since the first quarter of the year. It edged down 0.1%, in contrast to a 0.8% gain in the preceding three months. “Exports grew a lot faster than imports thanks to the weak euro, with goods exports in particular growing strongly”. Economists expect the Eurozone economy to grow 0.4 per cent on a quarterly basis, in line with that seen in the first quarter.

Weak investment, on the other hand, weighed on growth, Destatis added.

Economists warn that, without a pickup in business activity, eurozone countries will continue to struggle with high debts and unemployment.

Finance Minister Michel Sapin insisted that the second biggest economy in the eurozone was still on course to post 1 percent growth over the year as a whole. To achieve that, Mr. Sapin said the government will stick to its policy of tax cuts for businesses, which has proved controversial with the left of the ruling Socialist party.