French growth revised upwards in ray of hope for Eurozone
France’s economy grew faster than initially estimated in the second quarter in a piece of good news for the struggling Eurozone, official statistics have shown.
Read more: German consumers surprisingly upbeat as country slides towards recession
French GDP grew by 0.3 per cent in the second quarter of 2019, up from an initial estimate of 0.2 per cent, the country’s data body said today.
The growth rate was the same as the previous quarter and well above Germany and the UK whose economies both contracted during the months from April to June.
French growth was driven by domestic demand, which contributed 0.4 percentage points to GDP growth compared to 0.3 percentage points in the previous quarter.
France bucked the global trend of lower trade volumes, with the foreign trade balance contributing 0.1 percentage points to growth compared to minus 0.3 percentage points in the first quarter.
Even as the world’s developed economies have struggled to deal with the US-China trade war and a global slowing of growth, consumers have propped up economies as unemployment has fallen and wages grown.
Consumer confidence has not been enough to prevent Germany, the Eurozone’s biggest economy, from sliding into recession, however.
The outlook for the Eurozone remains poor despite a relatively strong GDP reading from France, with the average growth rate at just 0.2 per cent.
European markets underperformed yesterday due to fears of a US recession as the country’s bond “yield curve” inverted, meaning yields on long-term bonds were below those on short-term bonds. This has traditionally heralded a prolonged contraction.
Yet Ruth Lea, economic adviser to the Arbuthnot Banking Group, said: “Former [US Federal Reserve] Chair Janet Yellen’s comments, that the inverted yield curve was a ‘less good signal’ of recession ‘on this occasion’, and that the US ‘has enough strength’ to avoid recession, seem reasonable.”
Read more: Eurozone output beats expectations in August but economy remains weak
“But Germany’s economy does seem to be on the brink of technical recession or, at best, a period of stagnation as its heavily production weighted, and export-led, economy suffers from the slowdown in world trade growth.”