French Economy Posts Best Quarter Since Hollande Took Power
Gross domestic product grew 0.5 percent in the three months through June, after shrinking in the two previous quarters, national statistics office Insee said in an e-mailed statement today in Paris. The median forecast of 26 economists surveyed by Bloomberg was a 0.2 percent expansion.
Hollande, who is battling unemployment at a 14-year high and struggling to contain the budget deficit, began trumpeting an exit from recession last week in a bid to instill confidence among consumers and executives. The Socialist president will need the economy to pick up substantially if he is to keep a pledge to reverse a 26-month increase in jobless claims, economists said.
“France’s competitiveness hasn’t improved at all, consumer confidence is still very low and Hollande’s pledge to reverse a rise in unemployment has amounted to nothing so far,” Jennifer McKeown, an economist at Capital Economics in London, said before the release. “It’s much too soon to declare a recovery.”
The euro erased a decline after the French numbers. The currency traded little changed at $1.3269 at 8:25 a.m. in Paris.
Europe’s second-largest economy has barely grown in more than two years. The last time GDP exceeded today’s rate was in the first quarter of 2011, when the economy expanded 1.1 percent, according to Insee data through yesterday.
Today’s numbers showed consumer spending advancing 0.4 percent and exports rising 2 percent in the quarter. Total domestic demand contributed 0.3 points to the GDP advance, while inventory building added 0.2 points. Including imports, the impact of international trade on growth was neutral, after representing a 0.2 percent drag in the first quarter.
The International Monetary Fund urged Hollande this month to ease the pace of deficit reduction in an effort to support growth. It predicted that France’s GDP will shrink 0.1 percent in the whole of 2013 before expanding 0.8 percent next year.
A record 3.2 million people are looking for work in France, according to Labor Ministry statistics, while the unemployment rate stands at 10.8 percent, the highest since early 1999.
All of that has weighed on Hollande’s popularity. Only 27 percent of voters approve of his performance, less than any of his predecessors in the job under France’s current constitution, according to an Ifop poll for the Journal du Dimanche published July 21.
So with industrial production up 1.4 percent in the second quarter and business confidence at a 15-month high, Hollande has jumped on the prospect of good news.
“The economy is starting to show favorable signs,” he said Aug. 8. Finance Minister Pierre Moscovici followed up three days later, saying “growth is taking root” and declaring the nation’s recession over.
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