The Bank of France trimmed its forecast again for French second-quarter economic growth to 0.2 percent quarter-on-quarter, from 0.4 percent previously, hinting that a recovery is running out of steam earlier than expected. The revision pointed to a sharp mid-year slowdown for the French economy after a relatively strong showing in the first quarter, when it grew by 0.9 percent from the previous period thanks to healthy activity in industrial goods sectors.
The Bank of France's monthly survey showed the auto and manufacturing sectors cooling down, while order books looked less favourable. Economists said the French slowdown fell in line with a wider deceleration in Europe and the rest of the world, but that France was stumbling earlier than its neighbours.
"The overall message, both in Europe and globally, is one of a slowdown, a deceleration of growth," said Nick Matthews, a senior European economist at RBS in London. "The key question is whether it is transitory or protracted. Outside of Germany, most major European economies are struggling to keep their economies growing as debt burdens force them to slash public spending.
Britain's construction industry struggled to grow in May, adding to signs that the economy was stagnant in the second quarter, while high factory-gate inflation pointed to further price increases for consumers. However, Germany posted a trade surplus of 12.8 billion euros on Friday, a day after data showed that France's trade deficit widened to a record 7.4 billion euros.
Matthews said that an upbeat start to the year in France helped by the lingering effects of stimulus measures had given way to weaker activity, reflecting a drop in global demand. In its monthly report on the economic climate, the French central bank said industrial activity had declined in June.
Comments
Comments are closed for this article.