France's Q1 Growth Rate Stagnates at 0%... Impact of Weak Domestic Demand

Citizens wearing masks are walking on the Champs-?lys?es street in Paris.
[Image source=Yonhap News]

[Asia Economy Reporter Chunhee Lee] France did not achieve economic growth in the first quarter of this year. Economic growth stalled due to sluggish domestic demand caused by rising prices.

France's National Institute of Statistics and Economic Studies (Insee) announced on the 29th (local time) that the gross domestic product (GDP) for the first quarter of this year (January to March) showed no change in a preliminary estimate. Accordingly, the GDP growth rate for this year is forecasted to be 2.4%.

Last year, France's GDP grew by 0.2% in the first quarter, 1.5% in the second quarter, 3.0% in the third quarter, and 0.8% in the fourth quarter, resulting in an annual growth of 7.0%, the highest growth rate since 1969, which contrasts with this year's performance.

The French statistics office pointed to sluggish domestic demand as the cause of the economic growth stagnation. Household consumption expenditure in the first quarter of this year decreased by 1.3%, unlike the 0.6% growth seen in the fourth quarter of last year. In particular, spending in the hotel and dining sectors fell by 5.3%, and expenditure on goods such as clothing and textiles also dropped by 1.7%.

In April this year, the annual inflation rate was announced to have reached 4.8%, 0.3 percentage points higher than the previous month, due to rising prices of services, food, and manufactured goods. Bloomberg reported that when converted to the indicator (HICP) used by the European Central Bank (ECB), the April inflation rate was 5.4%, the highest since the introduction of the euro in the early 1990s.

This content was produced with the assistance of AI translation services.