2023-07-28 11:45:29
Posted Jul 28, 2023, 7:55 a.m. Updated Jul 28, 2023, 11:45 a.m.
Divine surprise: economic activity jumped 0.5% in the second quarter in France, according to the provisional estimate published this Friday morning by INSEE. A figure significantly higher than expected. The Institute of Statistics as the Bank of France expected a modest increase of 0.1% of GDP between April and June.
Despite the revision of the first quarter – to +0.1% against +0.2% previously announced by INSEE – the country’s growth overhang for 2023 already reached 0.8% at the end of the second quarter. This is excellent news for the government, which has so far maintained its objective of 1% growth this year. Invited on RTL, the Minister of the Economy, Bruno Le Maire, immediately hailed this “remarkable performance” and was pleased to see the beginning of a “virtuous circle where it is production that finances our social model and the redistribution”.
Good foreign trade performance
In fact, the good results for the quarter are based on foreign trade: in a deteriorated context, it contributed positively to growth “up to 0.7 points”, according to INSEE. Exports picked up and grew much faster than imports (+2.6% vs. +0.4%).
The production of goods and services increased at a sustained pace (+0.8% after +0.4%). This acceleration is explained in particular by the dynamism of the manufacturing industry (+1.1% after +0.8%) which is benefiting from the gradual restart of the nuclear fleet as well as the rebound in transport equipment – aeronautics in particular – and “other industrial products”. The production of market services has also accelerated. Unsurprisingly, penalized by the rise in interest rates, the construction sector is suffering (-0.8%) and household property purchases continue to plunge.
Consumption at half mast
Despite the more expensive money, business investment is nevertheless holding up and is still posting a slight increase of 0.1%.
In the context of still high inflation, even if it is settling down, domestic demand now appears to be the weak point of activity. Its contribution to growth over the quarter is negative. Household consumption, the traditional driver of the French economy, fell again by 0.4% under the effect of the fall in purchases of goods by the French (-0.7%).
As inflation on supermarket shelves is slow to subside, they have reduced their food purchases. Their expenses fell by 2.7% from one quarter to another and by 7.5% over one year. An encouraging sign, however, is that the trend is beginning to reverse. In June, food purchases rebounded by 2.5% (consumption rose overall by +0.9% over the month).
Households’ appetite for services, on the other hand, is undeniable (+0.7%). Spending on transportation increased by 3% in the second quarter and spending on accommodation and food services by 1.6%.
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