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

Employees are witnessed at a making building web-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 next quarter preliminary financial expansion as a “victory”, even as analysts mentioned fears about a economic downturn in Europe have been expanding thanks to growing inflation.

France, the euro zone’s next-most significant financial state, posted preliminary gross domestic item (GDP) growth of .5% in the second quarter.

The preliminary figures, introduced by France’s INSEE studies physique, conquer forecasts in a Reuters poll which experienced predicted .2% growth for the quarter.

“It is a victory for the French economy in hard moments,” Le Maire informed a information conference, incorporating it intended France would satisfy the government’s intention for 2.5% expansion for 2022.

The French financial system obtained a boost from exports, additional INSEE, though analysts claimed close to-phrase pressures remained in phrases of inflation. Facts on Friday showed that preliminary inflation for July stood at 6.8%.

France’s Large Council on Community Finances (HCFP) also published a report on Friday which believed that President Emmanuel Macron’s government was too optimistic about the economic outlook. read through far more

Le Maire refuted this, saying the government’s economic progress forecasts were being “credible and major.”

“Development has been supported by amplified exports, even so, the underlying image is fewer positive,” said Sophie Lund-Yates, direct equity analyst at Hargreaves Lansdown.

“Residence usage fell in the quarter, possible a outcome of increased fiscal prudence, although government paying out also came off the boil. The in general facts set is of system a aid but this has finished minor to wholly erode recessionary fears,” she added.

Rabobank also said it still anticipated inflation to force the euro zone into a economic downturn later on this 12 months.

“We nonetheless be expecting the euro zone financial state to enter a shallow economic downturn in the 2nd 50 % of 2022 to the 1st 50 percent of 2023, while the threats of a serious contraction because of to an electrical power disaster have amplified,” wrote Rabobank in a take note.

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

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