French economy grows in Q1, thanks to household spending, investments

The French economy grew slightly in the first quarter, driven by household spending and investments, preliminary data from the INSEE statistics agency showed on Tuesday, a touch above analysts' expectations. The euro zone's second-biggest economy rose by 0.2% in the first three months of the year after a 0.1% growth in the fourth quarter of 2023, INSEE said in its quarterly GDP report.

The French economy grew slightly in the first quarter, driven by household spending and investments, preliminary data from the INSEE statistics agency showed on Tuesday, a touch above analysts' expectations.

The euro zone's second-biggest economy rose by 0.2% in the first three months of the year after a 0.1% growth in the fourth quarter of 2023, INSEE said in its quarterly GDP report. Quarterly domestic demand (excluding inventories) picked up and positively contributed to GDP growth, INSEE said.

The demand was driven by household spending growth, which accelerated to 0.4% compared with 0.2% in the fourth quarter of 2023, and investments (gross fixed capital formation) rebound, up 0.3% in the first quarter after a 0.9% drop in the previous one. However, foreign trade contribution to quarterly GDP fell to 0 percentage points after +1 point in the previous quarter, INSEE said.

For the third quarter in a row, inventories weighed on GDP growth, but in a less pronounced way than previously, with a -0.2 percentage point contribution in the first quarter in comparison to -0.9 point in the fourth quarter of 2023. A Reuters poll of 29 economists had on average forecast a 0.1% growth in gross domestic product (GDP), in the first quarter, with estimates ranging from 0.0% to +0.2%.

The growth in the quarter was in line with Bank of France's expectation announced in early April.

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