France GDP grows 0.5% in Q2, recovering from previous quarter's contraction

[Image source=AP Yonhap News]

[Asia Economy Reporter Lee Hyun-woo] The French economy, which experienced negative growth in the first quarter due to the impact of the Ukraine crisis, returned to a growth trend in the second quarter.

On the 29th (local time), the French National Institute of Statistics and Economic Studies (Insee) announced that the preliminary GDP growth rate for the second quarter (April to June) was 0.5%. The overall GDP growth rate for this year was projected at 2.5%.

Previously, France's GDP growth rate recorded a negative growth of -0.2% in the first quarter due to the impact of Russia's invasion of Ukraine, but rebounded after just one quarter. In particular, exports increased by 0.8% and imports decreased by 0.6%, with strong foreign trade driving economic growth in the second quarter, according to the French National Institute of Statistics.

However, steep inflation remains a significant burden on the French economy. Consumer prices in France rose by 6.1% in July compared to a year earlier, marking the highest inflation rate for six consecutive months. The previous record was 5.8% in June. When converted to the Harmonized Index of Consumer Prices (HICP) used by the European Central Bank (ECB), the inflation rate was 6.8% in July and 6.5% in June.

As the summer vacation season approaches, the pace of rising service prices has accelerated, and increases in food and goods prices have intensified the inflation trend. Bloomberg reported that neighboring Spain also saw GDP growth of 1.1% in the second quarter, but inflation reached a record high of 10.8%.

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