French Finance Minister hails “victory” as Q2 preliminary GDP beats forecasts

Workers are noticed at a constructing building internet site, with a crane in the history, in Nantes, France, June 20, 2022. REUTERS/Stephane Mahe

PARIS, July 29 (Reuters) – French Finance Minister Bruno Le Maire hailed the country’s forecast-beating second quarter preliminary financial development as a “victory”, even as analysts stated fears about a economic downturn in Europe ended up growing thanks to rising inflation.

France, the euro zone’s 2nd-most important financial state, posted preliminary gross domestic product (GDP) expansion of .5% in the next quarter.

The preliminary figures, introduced by France’s INSEE statistics entire body, conquer forecasts in a Reuters poll which experienced predicted .2% development for the quarter.

“It can be a victory for the French economic system in tricky periods,” Le Maire informed a information convention, including it intended France would fulfill the government’s objective for 2.5% expansion for 2022.

The French economy bought a increase from exports, additional INSEE, though analysts claimed close to-term pressures remained in terms of inflation. Knowledge on Friday confirmed that preliminary inflation for July stood at 6.8%.

France’s Higher Council on Public Finances (HCFP) also revealed a report on Friday which estimated that President Emmanuel Macron’s government was way too optimistic about the financial outlook. read through extra

Le Maire refuted this, declaring the government’s financial development forecasts had been “credible and severe.”

“Growth has been supported by greater exports, nonetheless, the underlying image is much less favourable,” stated Sophie Lund-Yates, guide equity analyst at Hargreaves Lansdown.

“Family consumption fell in the quarter, very likely a result of amplified fiscal prudence, even though governing administration investing also arrived off the boil. The in general data established is of system a relief but this has done tiny to fully erode recessionary fears,” she extra.

Rabobank also stated it still envisioned inflation to push the euro zone into a recession afterwards this year.

“We nevertheless be expecting the euro zone financial state to enter a shallow recession in the second fifty percent of 2022 to the initially half of 2023, despite the fact that the challenges of a severe contraction thanks to an power disaster have greater,” wrote Rabobank in a notice.

Reporting by Myriam Rivet, Michal Aleksandrowicz, Dominique Vidalon and Elizabeth Pineau
Enhancing by Sudip Kar-Gupta

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