France saw no growth in the second quarter after expanding by 0.7% in January to March period, France's statistics agency Insee said. Economists had projected a 0.3% increase in the French GDP.
According to Bloomberg, recent strikes at refineries as well as the French people’s fight against plans to reform labor laws were among the major reasons for economic stagnation.
Household consumption is considered to be the main growth driver in France. But it contracted considerably after increasing by 1.2% in the first quarter. The growth stalled even despite €40 billion in tax breaks offered to businesses.
All this happens just 9 months before presidential election in spring 2017.
In January-March, the French construction sector started to accelerate, but currently investments in the sector sharply contracted, the same way as in the manufacturing sector and the services sector. Imports fell by 1.3% after rising by 0.5% in the first quarter. Exports growth also slowed down.
Moreover, the official number of jobless in France rose by 5,400 or 0.2% in June. However, the increase did not affect the overall figure for six months of 2016. In January-June, the number of unemployed fell by 58,000.
Meanwhile, in January to March 2016 there was record GDP growth for the past three years. Finance minister Michel Sapin said the government still remained its growth forecast for 2016 at 1.5%.
