France experienced a notable economic upswing in the third quarter, largely driven by the inflow of tourism and consumer spending in anticipation of the Paris Olympic and Paralympic Games, as announced in official data on Wednesday.
According to initial estimates by the national statistics bureau, INSEE, the country's gross domestic product (GDP) increased by 0.4% over the quarter, a doubling of the 0.2% growth observed in the second quarter and surpassing economists' predictions of 0.3%.
The rise in economic activity was reflected in household consumption, which grew by 0.5% after no growth in the previous quarter. Government spending maintained its growth rate of 0.5%.
However, gross fixed capital formation experienced a more pronounced decline, slipping by 0.8% compared to a modest 0.1% dip earlier.
In terms of trade, exports fell by 0.5%, reversing the previous period's equivalent rise, and imports saw a more significant reduction of 0.7%, following a 0.1% increase. Consequently, the positive contribution of foreign trade to GDP stood at 0.1 percentage points.
Inventory changes contributed a slight 0.1 percentage point to GDP growth, following no contribution in the prior quarter.
Separately, INSEE reported that household spending growth decelerated in September, primarily due to reduced expenditure on food and energy. Consumer spending marginally increased by 0.1%, a slowdown from August's 0.4% growth.
This modest increase in spending on manufactured goods, which rose by 1.8%, was counterbalanced by declines in food and energy consumption, which fell by 1.6% and 0.3% respectively.
The International Monetary Fund projects the French economy will grow by 1.1% annually in both 2024 and 2025.
In a recent development, Moody's downgraded France's sovereign credit outlook to 'negative' from 'stable', highlighting concerns over the government's potential inability to enact necessary fiscal reforms to control wider-than-expected budget deficits and prevent worsening debt affordability.
