French first quarter growth boosted by increased consumer spending and investment

The French economy is showing signs of growth and resilience as it gained momentum in the first quarter of the year, surpassing expectations. According to official data released by statistics agency INSEE, the economy expanded by 0.2 per cent in the first three months of 2024, up from a 0.1 per cent growth in the previous quarter.

Economists had predicted a lower growth rate of 0.1 per cent, making the actual figures a pleasant surprise. The increase in economic activity was driven by a surge in consumer spending and business investment, indicating a positive outlook for the country’s financial health.

Finance Minister Bruno Le Maire expressed optimism about the report, stating that the facts are clear – French growth is on the rise. Household spending grew by 0.4 per cent, fueled by lower inflation rates, while business investment saw a 0.5 per cent increase, bouncing back from a previous contraction.

Looking ahead, economists anticipate a further uptick in economic activity throughout the year as lower inflation boosts consumer purchasing power and interest rate cuts stimulate investment. Inflation levels have also shown signs of easing, with the EU-harmonised rate remaining stable at 2.4 per cent in April, the lowest level in nearly three years.

Overall, the positive growth figures indicate a promising trajectory for the French economy, providing a much-needed boost for the government amidst previous criticism over economic forecasts and budget deficits.