France Teeters on the Brink of Recession

December 28, 2012 by Trey Thoelcke

France
Source: Thinkstock
It may not seem like much, but France’s INSEE reported that third-quarter gross domestic product was higher by 0.1%, not the 0.2% preliminary number. GDP contracted in the second quarter. France’s economy continues to hug a flat line. A recession could be triggered by more weakness in the EU nations or a recession in the U.S. brought on by the fiscal cliff.

INSEE reports:

In 2012 Q3, French gross domestic product (GDP) in volume terms rose by 0.1%, after a 0.1% decrease over the previous quarter.

Household consumption expenditure recovered (+0.2% after –0.2%) while gross fixed capital formation (GFCF) decreased (–0.3% after +0.4%). Overall, total domestic demand (excluding inventory changes) contributed positively to GDP: 0.2 percentage point after 0.1 percentage point. Imports fell (–0.5% after +1.6%) and exports slightly accelerated (+0.6% after +0.3%). Hence, the foreign trade balance contributed positively to GDP growth: 0.3 percentage point (after –0.4 percentage point). This contribution is offset by changes in inventories contribution: –0.4 percentage point in Q3, after +0.2 point.

Douglas A. McIntyre

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