French economy stagnates, avoids technical recession

France avoided entering a technical recession but its economy stagnated in the second half of 2023, according to official data released on Tuesday.

The eurozone’s second largest economy stagnated at 0.0% in the last three months of last year after a flat third quarter, statistics agency INSEE said in its quarterly GDP report.

The data for the third quarter was revised upwards from a 0.1% drop previously.

Weaker fourth quarter domestic demand was exactly offset by a boost from net trade.

“Overall, stagnation in Q4 and the upward revisions to both the Q3 and Q2 outcomes means French GDP rose by 0.9% in 2023 after rising by 2.5% in 2022,” said Pantheon Macroeconomics senior Europe economist Melanie Debono.

“This year, growth is likely to slow a little further, we think, to 0.6%. The survey data for January have been bleak, casting a cloud over our call for a recovery in GDP from this quarter, as falling inflation supports consumption.”

“The PMI, for example, points to GDP falling by near-1% on the quarter, well below our forecast for a 0.1% decline. As a result, at this point, the risks are likely tilted towards slower growth than we expect this year.”

Reporting by Frank Prenesti for Sharecast.com