Surprise growth edges France out of recession
AFP/The Local · 14 Aug 2013, 10:49
Published: 14 Aug 2013 08:14 GMT+02:00
Updated: 14 Aug 2013 10:49 GMT+02:00
France's economy has edged out of recession, posting 0.5 percent quarter-on-quarter growth in April through June, after having contracted for the previous six months, official data released on showed.
The surprise return to growth was largely thanks to improved domestic consumption, the national statistics agency INSEE said.
"This is the largest increase since the first quarter of 2011, INSEE added.
The country had officially entered a recession in the first quarter of 2013 with gross domestic product contracting 0.2 percent, after shrinking the same amount in the last quarter of 2012.
The consecutive drops in growth over the last two quarters meant the French economy was officially in recession, for the first time in four years. Those figures piled further pressure on President François Hollande as he struggles to deal with record unemployment rates.
The positive figures from INSEE were welcomed by French Finance Minister Pierre Moscovici who said the date "confirms the end of the recession in the French economy".
"It amplifies the encouraging signs of recovery," he added in a statement.
The minister told the Nice Matin newspaper at the weekend that the "French economy is recovering to be more sustainable, stronger and able to create more jobs".
"I have every reason to believe that 2014 will be the first year of real growth for three years," said Moscovici before confirming that work still needed to be done to reduce public deficits.
"we will reduce public spending, then by a limited increase in the tax burden of 0.3 percent, in line with social justice," Moscovici said.
In July President François Hollande's claim in a TV interview that the French economy is on the verge of recovery was met with widespread ridicule in the press and by the public.
"The economic recovery is here," Hollande told TV viewers.
He was accused of denying the reality, but with INSEE's latest figures it seems the president's sixth sense was not to be laughed at after all.
Figures released on Wednesday also showed a boost for the German economy which grew by 0.7 percent.
That meant good news for the Eurozone with figures released later on Wednesday expected to show that its economy has also climbed out of recession.
"The eurozone's two heavy-weights bounced back with substantial growth in the second quarter," said Berenberg Bank economist Christian Schulz.
"Their growth, in combination with the much milder recession in the crisis countries, has dragged the eurozone out of recession since Easter."
In both Germany and France, growth was driven by domestic demand, while trade was buoyant but probably broadly neutral for overall growth, the expert said.
But he noted that while investment made a return in Germany, "it remained elusive in France, suggesting that France's bounce-back does not signal a return to persistent strong growth yet."