Daily Management Review

Appearances Are Deceiving In The French GDP Figures Of The Last Quarter


01/30/2016


The economic slowdown in the French euro zone is not as alarming as it appears, says economists.



According to the economists, amid the slowing down trend of the economy of France during the end of 2015, the data seemed to be stranger than what “they appeared”. Moreover, the reason for the dip has been assigned to the retreating of “household consumption” “in the face of transitory factors”.
 
In the December calculation, a three month total, of the gross domestic product, the euro zone, being the “second largest economy” recorded “an advance of 0.24% quarter-on-quarter”. The said information was reported by INSEE which holds the statistic figures of the country.
 
Likewise, the recorded GDP growth remained only three percent under the GDP projection of the French Central Bank. A research report that was sent to clients carried the above mentioned statement of Francois Cabau from Barclays.
 
A marking a positive “upshift”, the entire year of 2015 resulted in a “1.1%” expansion of the economy, while in the previous year the gain was only up to “0.4%”.
 
The ‘mild weather’ coupled with the tragic Paris attack led to the slowing down of consumption by “0.4% quarter-on-quarter pace in the fourth quarter” which had a direct link to the economic state. Cabau also pointed out that this loss has nearly reversed the gain of the previous quarter. While, chipping in Pantheon Macroeconomics added:
"Overall, spending fell 0.4% quarter-on-quarter in Q4, but the underlying trend in non-energy consumption points to a rebound in Q1, assuming the weather doesn’t continue to play tricks with utility spending”.
 
Furthermore, the consumption fall was joined by “0.3 percentage” drag in the net exports’ figure. Nevertheless, an increment of “0.4% and 0.8%” was seen in the “government spending and fixed asset formation” respectively in comparison to the previous year’s quarterly performance.
 
Construction sector retained a strong a platform for the investors, whereby registering a rise for the first time after the third quarter of 2013, while Cabau also added:
"The reasons for the private consumption slowdown in Q4 15 are well identified and should be temporary in nature (mild weather, impact of terrorist attacks). Adding the investment positive surprise, we think that French GDP is poised to accelerate significantly in Q1 16.
"In sum, we project French GDP to accelerate slightly this year, increasing by 1.4%, consistent with 0.4% q/q sequential prints (Government: 1.5%; INSEE: 1.0%)”.






References:
http://www.digitallook.com/
 







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