| France: Q3 GDP growth rebounded to 0.4% q/q, driven mainly by private consumption |
| 15.11.11 10:12 | |
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French real GDP grew 0.4% q/q in Q3 11, in line with our forecast (consensus: 0.3%, Banque de France: 0.1%, INSEE: 0.3%), after falling 0.1% q/q in Q2 (revised from 0.0). The carryover effect is 1.7% in 2011 based on the assumption there will be zero growth in Q4 and is +0.1% in 2012 if Q4 is in line with our forecast and there is zero growth in the remainder of the year. Unlike most other statistical institutes providing the initial estimates of Q3 GDP, INSEE publishes an expenditure-based breakdown. This showed that private consumption increased by 0.3% (BarCap: 0.3%) after a 0.8% q/q decline in Q2. The acceleration in private consumption was due to a rebound in energy, water and waste (+6.3%). In addition, households' consumption of transport equipment (especially cars) increased slightly, and public consumption grew 0.2% q/q (BarCap: 0.1%). Investment rose 0.4% (BarCap: 0.9%) - of this, households (driven up by new housing construction) increased 1.4% and the public sector expanded 0.5%, but firms decreased by 0.3% q/q. As a result, internal demand excluding inventory changes rose 0.3% q/q after contracting 0.3% in Q2. Moreover, the contribution from the change in inventories was flat on the quarter (BarCap: 0.0pp), after subtracting 0.2pp in Q2. Imports rose 0.3% q/q (Q2: -1.2%), and the increase in exports accelerated slightly to 0.7% (Q2: +0.5%). Consequently, net exports contributed +0.1pp (BarCap: 0.1pp) after adding 0.5pp in Q2. Looking ahead, we expect the French economy to contract on the quarter (-0.1% q/q in Q4). The deterioration in the labour market since June 2011 provides evidence that a negative feedback loop in confidence is in play. Moreover, the fact that the French government will step up the pace of consolidation is also likely to weigh on domestic spending. Beyond depressing investment and private consumption, we think the rise in inflation will also cloud consumers' outlook in Q4. At 10am, the euro area flash GDP data are released. Pencilling in the release of GDP figures from Germany (+0.5%) and Spain (0.0) we continue to expect euro area GDP grew 0.2% q/q (consensus: 0.2%), with private consumption rising 0.3% and net export contributing 0.1pp to growth. source: BarCap |
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