Christiane Perry-Roy L'actualité internationale

French Economy Pressured by Weaker Consumer Spending

The Wall Street Journal The Wall Street Journal

The end of 2015 was marked by unseasonably mild weather and the terror attacks in Paris

French President Francois Hollande pictured in December. France’s annual GDP growth was the strongest of Mr. Hollande’s presidency but didn’t halt rising unemployment. 
By William Horobin

PARIS—French economic growth slowed at the end 2015 as consumer spending dropped in a period marked by unseasonably mild weather and the death of 130 people in terror attacks on the streets of Paris

The eurozone’s second-largest economy grew 0.2% quarter-on-quarter in the final three months of the year, after growing 0.3% in the third quarter, according to figures Friday from national statistics agency Insee. The figures were in line with economist expectations.

The slowdown in the fourth quarter raises further questions about an already spluttering recovery in France. For the whole of the year, gross domestic product rose only 1.1%, Insee said. While that marked the strongest annual performance during François Hollande’s presidency, it was insufficient to halt the rise in unemployment, which reached 10.6% last year.

The slowdown in France is also an early indicator of the health of the wider eurozone at the end of 2015. Spain, the eurozone’s fourth-largest economy, publishes fourth-quarter GDP at 0800 GMT, but Germany not until next month.

Recent surveys show that economic activity in the eurozone may have slowed further still at the start of 2016 as softness in China and other large emerging markets dragged on demand for European goods.

The bleaker picture for European exports and steep falls in oil prices prompted the European Central Bank to warn last week that the outlook for inflation had weakened significantly. ECB President Mario Draghi signaled that the central bank may expand stimulus measures in March to push prices back up.

In France in the fourth quarter, trade had a negative impact on economic growth as import growth outweighed export growth, Insee said.

Consumer spending—the traditional pillar of the French economy—dropped 0.4% in the fourth quarter from the third. Insee warned earlier in January that the Paris terror attacks had a significant impact on hotel trade. Unseasonably mild weather in France also weighed on consumer spending by decreasing demand for heating and clothing, Insee’s said.

The main driver of domestic demand came from the fastest growth in investment in four years, Insee’s figures showed. The investment of non-financial companies alone accelerated to 1.3% quarter-on-quarter.