French economy stagnates in Q2, misses expectations

PARIS (REUTERS) - The French economy slowed to a standstill in the second quarter despite stronger exports and corporate investments as changes in inventories and weak consumer spending weighed on the economy.

Data published by the INSEE national statistics agency on Friday showed the 2-trillion euro economy was left unchanged at 0.0 per cent in the three months to June, missing a forecast of 0.2 per cent growth. It had grown by 0.7 per cent in the first quarter, INSEE said, up from a previous estimate of 0.6 perc ent.

Companies that were selling down their inventories after building them up in the first quarter accounted for much of the stagnation, dragging GDP growth down by 0.4 points.

Consumer spending growth slowed sharply from a 0.9 per cent increase in the first quarter to a 0.1 per cent rise in the second quarter, much of which was due to lower spending on energy amid higher temperatures.

Exports were a bright spot, up 1.7 per cent in the second quarter after growing by 1.3 per cent in the three months to June. Trade's contribution to growth was at its highest since the last quarter of 2011.

Corporate investment grew by 0.2 per cent in the second quarter, reaching their highest level since 2008. Investment in real estate, however, contracted for the eighth quarter in a row.

French Finance Minister Michel Sapin said stronger exports and investments made the government confident in its estimate of 1 per cent annual GDP growth for the year.