French GDP flat in April-June period
Source: Agencies |
August 13, 2011, Saturday
|
Print Edition
Print Edition
FRENCH economic growth ground to a halt as household spending shrank in the second quarter, raising pressure on the government to announce cutbacks to convince turbulent markets it will deliver on debt reduction targets.
France's statistics office said GDP growth was zero in the April-June period versus first-quarter growth that, at 0.9 percent, was the best in almost five years.
The main cause was a drop in household consumption, which was down 0.7 percent from the first quarter, a particularly worrying sign for an economy that, unlike Germany's, is heavily reliant on domestic demand.
Economists polled by Reuters had on average predicted a rise of 0.3 percent.
Barclays' economics department said the French figure could drag the eurozone result lower than a consensus forecast of 0.3 percent.
Philippe Waechter, an economist at Natixis Asset Management, said France would need to generate growth of 0.5 percent in both the third and fourth quarters to reach its target of 2 percent growth overall this year, and that may not happen.
The Bank of France sees third-quarter growth of 0.3 percent.
Chris Williamson, economist at British-based consultancy Market, said a second-quarter GDP drop had always been on the cards after a bumper first three months.
"But it is clear the recovery has weakened significantly in recent months," he said.
After the European Central Bank moved this week to defend the bonds of Italy and Spain, market fire turned on France amid rumors about the health of its banks.
France's statistics office said GDP growth was zero in the April-June period versus first-quarter growth that, at 0.9 percent, was the best in almost five years.
The main cause was a drop in household consumption, which was down 0.7 percent from the first quarter, a particularly worrying sign for an economy that, unlike Germany's, is heavily reliant on domestic demand.
Economists polled by Reuters had on average predicted a rise of 0.3 percent.
Barclays' economics department said the French figure could drag the eurozone result lower than a consensus forecast of 0.3 percent.
Philippe Waechter, an economist at Natixis Asset Management, said France would need to generate growth of 0.5 percent in both the third and fourth quarters to reach its target of 2 percent growth overall this year, and that may not happen.
The Bank of France sees third-quarter growth of 0.3 percent.
Chris Williamson, economist at British-based consultancy Market, said a second-quarter GDP drop had always been on the cards after a bumper first three months.
"But it is clear the recovery has weakened significantly in recent months," he said.
After the European Central Bank moved this week to defend the bonds of Italy and Spain, market fire turned on France amid rumors about the health of its banks.
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