* No growth in Q3 than Q2 increased to + 0.7% * The strikes affected production * Stagnation of consumption and decline in business investment * Economists rather reassuring on the objective of 1.5% in 2016 (updated with comments from economists) by Myriam Rivet PARIS, July 28 (Reuters) – the French economy stagnated in the second quarter, blaming the backlash of its very strong start to the year and the effects of disruptions related to the movement against the bill work, without calling into question the scenario of growth close to 1.5% in 2016, say economists. For INSEE noted at the same time the first quarter growth to 0.7%, against 0.6% previously announced. And acquired in 2016, namely the level of GDP if growth was zero last two quarters, remains at 1.1%. The first estimate for the April-June GDP falls below the forecasts of economists polled by Reuters and the Bank of France (to 0.2% in both cases), and the latest forecast by Insee published mid-June, which stood at 0.3%. In a statement, the finance minister Michel Sapin recognizes that the figure is “disappointing”. But “beyond the jolts from one quarter to the next, the French economy remains on a recovery momentum that does not affect the forecast 1.5% growth in 2016,” says t -he. This assessment is shared by Axelle Lacan, economist at the institute COE-Rexecode, who, “with gains of 1.1%, this seems feasible.” Michel Martinez, economist euro area at Societe Generale CIB also judge that “there is no reason to worry about a reversal of growth”, although he stressed that “to reach 1.5% in average in 2016, it will take 0.55% growth in the third as the 4th quarters. ” Both recall that this backlash was expected after a very dynamic first quarter, even if the braking was greater than expected. The contribution of final domestic demand to growth in the quarter was thus void and that the change in business inventories cost him 0.4 points, only the foreign trade turned positive (0.3 points), allowing him to salvage. Stopping refineries because of strikes in May and June has penalized the spring production of manufactured goods (1.0%), impacting the total output of goods and services (-0.2%). But more surprisingly, household consumption, which jumped 1.2% in the first quarter, stagnated in both goods (0.0%) than for services (-0.1%), although INSEE has reported always vigorous energy costs. This sullen consumption was particularly reflected in the results of L’Oréal, the cosmetics giant who said Friday that France had cost him a point of growth for overall sales in the second quarter. ATTACK EFFECT? It is not guaranteed that the traditional engine of the French economy to start all full in the third quarter, in an environment marked by a series of Islamist attacks, including the attack to the truck that made 84 dead July 14 in Nice . “The attacks had hitherto a temporary effect on consumption, therefore on the economy () but now there is a repetitive aspect that will begin to penalize more sustainable economy through including higher the security costs for companies, “said Axelle Lacan. The overall investment contracted by 0.4% after three quarters of strong growth, the companies falling by 0.2%. He had jumped from 2.1% in Q1 to approach the expiration of the tax system of “overdamping” productive investment which was eventually extended for one year. While economists do not anticipate any marked rebound in business investment during the summer, they do not provide as long as it is affected by the prospect of “Brexit”. “Investigations in July on the business climate does not indicate Brexit of major impact in France, contrary to what has been observed in Germany,” noted Axelle Lacan. For his part, François Letondu (Societe Generale) estimates that the impact of Brexit growth will occur mainly via exports to the UK and save the confidence of French companies, especially since they benefit from conditions very favorable financing and evolve a sound banking system. Overall, these two economists expect a very gradual reacceleration in the second half that would strengthen the government’s target for the year. “We remain on a trend of modest recovery but is still better than what we knew in previous years,” said Francois Letondu. “In 2015 we had exactly the same situation, it is normal that an economy that is relatively open, which faces external shocks particularly important enough (as lower oil prices) know quite volatile rates of growth “has he said. Detailed statistics on the site of INSEE: French http://bit.ly/2aBBdRi The indicators in real time ECONFR Indicators of real time eurozone ECONEZ Update on French conditions ECO / FR (Edited by Yann Le Guernigou)
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