French GDP stagnates in Q2, misses expectations of 0.2% growth

Whatever the precise cause (and the estimate may in any case be revised down), the outlook for the Greek economy remains bleak owing to the trauma of late June and July when the banks were closed for three weeks and capital controls were introduced.

Growth in consumer spending-the main driver of the French economy-slowed to 0.1% in the second quarter from 0.9% in the first. Its economy declined by 0.4 percent between April and June, continuing a recession that has seen the Nordic country shrink annually since 2012.

Said BNP: “Overall, Germany and France have grown at a similar pace during H1 2015 of 0.3-0.4% q/q. This is solid but a little less than hoped for a few months ago”.

In Italy, GDP added a mere 0.2 percent, boosted by services but dragged down by a struggling manufacturing sector. According to provisional calculations, exports increased much more than imports, one of the reasons for this development being the weak euro.

France, the eurozone’s second largest economy, needs an annual growth rate at about 1.5 per cent in order to bring down unemployment, which now stands at more than 10 per cent of the workforce, to below 8 per cent over the next six years or so. German GDP improved in the second quarter, increasing 0.4 percent from the 0.3 percent rise in the first quarter.

Concerns over growth in emerging markets, China in particular, may hit investment in Germany, the Netherlands and Austria, which all disappointed in the second quarter.

The carry over from the first half of the year means the government’s 1 per cent growth forecast for the year is still well within reach but could make it harder to beat that target, as many expected, analysts said.

“[The] Eurozone economy is still growing at a middling pace based on a variety of leading indicators”, Eric Lascelles, chief economist at RBC Global Asset Management, said.

The international Monetary Fund last month cut its forecast for global growth, singling out financial-market turbulence in China and Greece.

German growth accelerated in the second quarter of 2015 but by less than expected, with foreign trade acting as a support and investment braking Europe’s largest economy.

“Neither the Chinese growth slowdown nor the events in Greece threw German companies off track”, said Andreas Rees at UniCredit.

With zero growth last quarter due to issues around consumer spending, the French economic recovery is sputtering along and it doesn’t look encouraging.