According to a preliminary estimate, economic growth in France in the second quarter 2018 was a moderate 0.2 percent compared with the previous quarter. The weak momentum of the previous quarter has therefore continued. All in all, the current data matches our forecast assessment. While exceptionally cold winter weather prevented stronger growth in the first quarter, the rail strike against the reform of the French state railways, which has since been implemented, is likely to have decelerated aggregate economic production. The strike lasted almost the entire quarter. In addition, global economic uncertainties have increased during the quarter, for example in connection with the trade disputes between the US and the EU.
Positive contributions to quarterly growth came in the second quarter from public consumer spending and, to a greater extent, from investments. The latter is particularly encouraging as it means that the uncertainties mentioned above have failed to bring the intact investment cycle of French companies to a halt. By contrast, negative effects – albeit only slight – came from private consumer spending as well as from net exports, with imports expanding far more strongly than exports. The robust import growth serves as proof that domestic demand is intact. However, it was not possible to sell all produced goods. This resulted in inventory increases which also helped to underpin economic growth.
Overall, the growth trend in France to date does indeed come as a slight disappointment. Even if growth was decelerated by special effects in the form of the weather and the strikes. Until now there are no signs of decelerating effects that could impact the third quarter. It is quite possible that we will see some positive catch-up effects between July and September. However, growth will not suffice to reach the strong average growth rates of 0.7 percent of the previous year. We therefore confirm our growth forecast of +1.7 percent for the whole of 2018.