France: Double dip

2 min
Stéphane Colliac
Stéphane Colliac Senior Economist for France and Africa

GDP growth came in at +0.25% q/q in Q4 2018, fully driven by net exports. Full-year 2018 GDP growth declined from +2.3% in 2017 to +1.5% in 2018. Two thirds of the latter was driven by a high carryover at the start of the year. In Q4, household spending decreased by -0.1% q/q. This weakness was the result of several factors, such as the second oil price spike (in October, after May), difficulties in the automotive sector (partly driven by new homol­o­gation rules and their impact on German carmakers) and the yellow vest blockades. The missing house­hold spending was pervasive in Q4, since residential investment deteriorated to +0% y/y (+5.1% in Q4 2017) and private consumption to +0.6% y/y (+1% y/y). As a result, manufacturers had to stabilize their output in Q4 2018 (+0.1% q/q) and construction output posted a double dip decline (-0.1% in Q4 after -0.2% in Q1). In 2019, current spending is expected to recover (purchasing power should increase by +2%) and push GDP growth to +1.2%, but increased unemployment (9.2%) will weigh on residential and durable goods spending of households.