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French GDP Disappoints

French GDP Disappoints

Oliver Morrison, Analyst

Talking Points

-France GDP data misses estimatesas consumer spending softens and exports decline.

- Could Le Pen gain ground on Macron?

- Up next Friday is crucial GDP data from the UK, US and Canada.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

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French GDP data have disappointed, with slower than expected growth of 0.3% in the first three months of this year, according to official stats from INSEE Friday morning. That missed the 0.4% figure that economists had predicted, and follows the 0.5% rise in the Q4 of 2016. GDP grew 0.8% year-on-year, the slowest figure since the Q4 of 2014.

Weak trade figures were the main culprit. Exports fell sharply (-0.7% from + 1.4%) in the three months, while imports accelerated (+ 1.5% from +0.8%). French consumers also dragged growth back, with household spending slowing to just 0.1% in the first quarter. On the plus side, INSEE has revised growth in the last quarter of 2016 up to 0.5%, from 0.4%. Business investment also jumped to +0.9% from 0.6%.

INSEE said: “Exports decreased in the first quarter of 2017 (-0.7% after + 1.4%), particularly in transport equipment. At the same time, imports accelerated (+ 1.5% after + 0.8%). In particular, purchases of refined petroleum products are rebounding and those of other industrial products are growing more vigorously. Overall, foreign trade weighed on growth, at -0.7 point, after a contribution of +0.2 point the previous quarter.”

The weak growth in the Euro-Zone’s second largest economy comes ahead of the second round of voting in the French presidential election, and casts some doubt over the strength of the Euro-area economy in the first quarter. Could the fiercely anti-Euro candidate Marine Le Pen now gain ground on the centrist Emmanuel Macron, who has vowed to strengthen the European Union rather than hold a vote on whether to leave? Macron blames France’s woes on France’s “sclerotic” and unsustainable welfare state, rather than European officials and immigrants.

Meanwhile, Spanish economic growth has beaten forecasts, rising 0.8% in the first quarter, while retail sales also rebounded much more strongly than expected in March. Up next Friday is crucial GDP data from the UK, US and Canada.

EURUSD has so far stayed flat in early Friday trade.

EURUSD 15-Minute Chart (Intraday April 28)

Chart by IG

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at

Follow Oliver on Twitter @OPWMorrison

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