France eked out 0.1% growth in Q4 as energy crisis eased

  • Foreign trade added 0.5% points to Q4 GDP
  • Domestic demand, inventories cut 0.2% points from GDP
  • Imports fell sharply as energy prices dropped

PARIS, Jan 31 (Reuters) – France managed to eke out meagre growth in the final quarter of 2022 as falling energy imports and firm business investment offset a pullback in consumer spending, preliminary gross domestic product (GDP) figures released on Tuesday showed.

The euro zone’s second-biggest economy grew 0.1% in the period, down from 0.2% in the third quarter, the INSEE national statistics agency said.

Nevertheless, the preliminary fourth quarter figures beat forecasts. A Reuters poll of economists’ expectations had forecast a 0.0% figure for the quarter.

The French fourth quarter GDP figures also provided a positive contrast to Germany after data on Monday showed that the euro zone’s biggest economy had unexpectedly shrunk in the fourth quarter.

For 2022 as a whole, the French economy grew by 2.6%, roughly in line with the government’s expectations.

“On paper, France should weather the energy and monetary policy shocks better than many other European economies,” Capital Economics chief Europe economist Andrew Kenningham said.

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“However, the weakness of domestic demand at the end of last year suggests that a recession is likely, albeit not certain,” he added.

As with other major economies, France had to contend with high energy import prices through much of 2022, so a drop in gas and power prices at the end of the year provided some much-needed relief.

INSEE said that foreign trade added 0.5 percentage points to GDP in the final quarter of 2022 as exports fell only 0.3 percentage points against 1.9% for imports on lower energy prices.

That helped make up for weak domestic demand and companies destocking inventories, which both subtracted 0.2 percentage points from GDP.

As record inflation eroded households purchasing power, consumer spending weighed on overall domestic demand, falling 0.9% from the previous three months.

Meanwhile, business investment held up, growing 0.8%, although that marked a sharp slowdown from the 2.3% that INSEE recorded in the previous three months.

Reporting by Sudip Kar-Gupta and Leigh Thomas; Edited by Benoit Van Overstraeten and Andrew Heavens

Our Standards: The Thomson Reuters Trust Principles.


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