According to a final estimate of the Insee published on Friday, the gross domestic product (GDP) contracted by 0.1% between April and June, contrasting with the strong growth in the first quarter, which had reached 0.7%.
This result is lower than the figure previously put forward by the institute, which reported at the end of August to a stagnation of GDP (0,0%) in the 2nd quarter. This revision is mainly due to the technical corrections, such as “the updating of coefficients of corrections for seasonal variations,” explains Insee.
To the minister of Economy and Finance Michel Sapin, a sudden stop does not change to the extent the government’s forecast.
“All of this does absolutely not affect the growth forecasts of the order of 1.5% for 2016 and 2017.,”-he said in Berlin during a press conference with his German counterparts Sigmar Gabriel and Wolfgang Schäuble.
The’growth” – in other words, the annual growth of GDP in the case of zero growth over the last two quarters – remains unchanged at 1.1 per cent, indicated Bercy to the AFP.
“Symbolically, entering into negative territory, is it strong enough“, however, considers Alexander Mirlicourtois, director of the economic conditions at Xerfi. “This is a negative signal which could mark the spirits, especially among economic actors“, he adds.
According to the Insee, it is the expenditure of household consumption, traditional engine of growth, which explain a large part of this bad pass: after an increase (+1,1%) in the first quarter, they fell 0.1% between April and June.
“there has been a threefold effect related to adverse weather, strikes and attacks, which has clearly weighed“, says Ludovic Subran, chief economist at Euler Hermes. It also refers to an adjustment of the production after the euphoria of the first quarter: “The activity was probably spread too fast, faster than the demand. So, businesses have accumulated inventories, which they had to pass in the second quarter, which affected the creation of value“.
- Clouds on the horizon –
For Bercy, he is a real hard blow, at a time to balance the budget in 2017. In its forecast, the government, which plans to bring the public deficit to 2.7% of GDP in 2017, the forecast of 1.5% growth this year, as next year.
“This involves having a sustained growth over the last two quarters of the year“, of the order of 0.4% for the one as for the other, recognizes Ludovic Subran, which considers these goals achievable.
According to the PMI index released Friday by the firm Markit, private sector activity has increased significantly in September after a sharp rise in August, reaching its highest level since 15 months.
The “business climate“, calculated from the answers of business leaders of the main sectors of activity, is slightly improved, in industry as in services, according to Insee.
“in Spite of everything, it is hard to see how one could hang on the 1.5% growth this year,” says Alexander Mirlicourtois, which considers the economic signals available for the third quarter, “relatively poor“.
“And if you don’t 1.5% growth at the end of the year, it will be difficult to have 1.5% in 2017“, for lack of momentum to start the year, ” adds the economist.
Several clouds, in fact, accumulated over the last few months on the horizon of the growth, with the attacks, the decline of world trade and the Brexit. This has prompted several institutions to revise downward their assumptions for 2017.
According to the OECD, growth is expected to reach 1.3% by 2017. According to the IMF, it should not exceed 1.2%… of A slowdown that could lead to a further deterioration in unemployment next year, with 79.000 additional job seekers according to the Unedic.