France has managed to stave off a recession in the initial quarter, showing minimal growth instead.
Paris (Reuters) - France's economy, still recovering from a 0.1% contraction in Q4 2024, managed a tiny growth spurt in Q1 2025 with GDP increasing by 0.1 percent, as announced by France's statistics agency Insee. Economists had predicted this outcome, albeit with some skepticism due to cautious consumer spending and a sluggish trade performance.
Despite stagnant household spending, companies played a crucial role in driving growth by replenishing stockpiles [1][3]. This inventory adjustment provided a temporary but vital boost to GDP. Additionally, improved business sentiment due to the passage of a deficit-reduction budget and increased political stability under Prime Minister François Bayrou supported economic confidence compared to the previous quarter's political uncertainty [4].
However, this hasn't yet translated into stronger consumer spending. The recovery remains fragile, with retail sales and industrial production metrics indicative of persistent softness in domestic demand [4]. External trade, too, failed to provide meaningful support [1]. Analysts caution that France continues to underperform the Eurozone average [4].
Meanwhile, Spain, France's neighbor, grew by 0.6% in Q1 2025. Economists anticipate a 0.2% increase for Germany, with the Federal Statistical Office set to release an initial estimate later in the morning.
(Reporting by Kate Entringer, written by Rene Wagner - For further questions, please contact our newsroom at [email protected])
Among other headlines:Who benefits when markets crash? Rumors circulate about VW stock before the next setback, suggesting a potential short opportunity at this resistance.Important days ahead for major US indices. Key economic indicators are set to release results that may significantly impact these indices.For more updates, visit our website.
In the wake of France's Q1 2025 growth spurt, there's a hint of resilience amid the recession, but concerns persist over the economy's vulnerability. Although Paris's businesses, notably through inventory adjustments, have contributed to the slight GDP growth, consumer spending remains sluggish and exports offers little support. The finance sector eyes the nearby Paris market, where resistance is being met in the wake of Volkswagen stock speculations, presenting a potential short opportunity. The anticipated growth of Germany's GDP by 0.2% (as reported later) is being closely watched alongside France's ongoing underperformance compared to the Eurozone average.
