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French Economic Growth Slows in Third Quarter - Insee Data

Published 10/28/2022, 02:50 AM
Updated 10/28/2022, 03:19 AM
© Reuters.

By Scott Kanowsky --The French economy grew at a slower pace in the third quarter, according to preliminary data from the National Institute for Statistics and Economic Studies on Friday, as consumer spending stagnated amid elevated inflation and exports decelerated.

Gross domestic product in the Eurozone's second-largest economy expanded by 0.2% during the period, down from the second-quarter reading of 0.5% but in line with expectations.

Household consumption growth was unchanged, edging lower from a previous quarterly increase of 0.2%. Expenditures on accommodations and transport fell sharply, while food consumption dropped for a third straight quarter, in a sign that a recent surge in inflation - which jumped by more than expected in October to 7.1% on an EU-harmonized basis - is leading consumers to rein in spending.

Meanwhile, foreign trade slashed 0.5% off of GDP due to a sharp contraction in the exports of services, as a post-pandemic surge in tourism seen earlier this year waned.

But this drop was partially offset by a recovery in transportation equipment exports, which analysts at ING suggested could mean that supply chain constraints are starting to dissipate. Imports, in particular for electricity and capital goods, were also stronger.

"Overall, the figures indicate that, despite sluggish consumption and a sharp drop in momentum in tourism-related activities, economic activity is holding up well in France, thanks in particular to improvements in supply chain tensions," the ING analysts said.

But they warned that an elevated level of inventories and a deterioration in order books may hit exports in the fourth quarter, while inflation will continue to weigh on spending.

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