Photographer: Balint Porneczi/Bloomberg

French Fourth-Quarter Growth Revised Up on Consumer Spending

  • Energy-price drop adds to disposable income helping rebound
  • Global economic slowdown poses threat to nascent recovery

The French economy grew faster in the fourth quarter than initially estimated as household spending recovered quickly after the Nov. 13 terrorist attacks.

Gross domestic product expanded 0.3 percent in the final three months of the year instead of the 0.2 percent estimated Jan. 29, national statistics office Insee said Friday. Consumer spending rose 1 percent in December, instead of the 0.7 percent originally estimated, reducing its drag on fourth-quarter GDP, Insee said.

The French economy is showing signs of its first real recovery since President Francois Hollande came to power in May 2012, with corporate investment growing at the fastest pace in two years. While the terrorist attacks that killed 130 people in Paris last November hurt spending and tourism, the latest data shows shoppers are bouncing back at a time when low energy prices are freeing up disposable income.

“This is a good sign -- there’s a bit of spending in there and a bit of investment,” said Philippe Waechter, chief economist at Natixis Asset Management in Paris. “Consumer spending was stronger in December and remained strong in January.”

Global Risks

Household outlays advanced 0.6 percent in January, Insee said. In the fourth quarter, spending fell only 0.2 percent, instead of the 0.4 percent decline first estimated.

Investment by non-financial corporations jump 1.3 percent in the fourth quarter, its biggest gain in two years. That has helped push jobless claims to a four-month low, the labor ministry said earlier this week.

Even so, economists are watching for signs that slowing global growth is hurting France. The Organization for Economic Cooperation and Development cut its 2016 world GDP forecast by 0.3 percentage points to 3 percent this month. International Monetary Fund Managing Director Christine Lagarde said that risks to the global economy are growing.

“We consider at the moment that the likelihood of materialization of such risks is slightly higher, but we still see growth,” she said Friday in Shanghai as finance chiefs from the Group of 20 economies began a two-day meeting.

French Business confidence is slipping, according to estimates published by Insee and Markit Economics this week.

“France is less exposed to the world economy than other countries but is impacted by what’s happening among its neighbors,” Waechter said. “Germany is growing more slowly, the U.K. is less dynamic and we’re affected. Europe just isn’t strong enough on its own to absorb shocks coming from elsewhere.”

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