PARIS (Reuters) – France’s economy is expected to eke out growth in the second quarter after stalling in the first, as higher consumer spending helps offset the drag from interest rates, the official statistics agency INSEE said on Thursday.
The euro zone’s second biggest economy is now set to record zero growth in the first quarter, compared with a previous estimate in February of 0.2% growth, INSEE said in its economic outlook.
The downward revision reflects lower industrial production resulting from refinery halts and supply chain problems in the automotive sector, it said.
It then expects the economy to grow 0.3% in the second quarter against its February estimate of 0.2%, leaving the economy with a growth momentum of only 0.5% by mid-year.
That means France would need quarterly growth of 0.7% in both the third and fourth quarters to have any hope of meeting the government’s recently revised 1% growth forecast for the full year.
Last month Paris lowered its 2024 growth forecast to 1% from a prior 1.4% and announced 10 billion euros in emergency budget cuts to keep its deficit-reduction plans on track. It remains under pressure to find extra savings.
The Bank of France said in its quarterly outlook on Tuesday that the economy was set to grow 0.8% in 2024, revising down its December forecast of 0.9%.
INSEE said on Thursday inflation would keep easing over the first half of the year from 2.9% in February to 2.6% in June.
(Reporting by Dominique Vidalon; Editing by Hugh Lawson)
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