French economic expansion slowed in the fourth quarter of 2022, in line with economists’ expectations, on the back of a slump in domestic demand that was led by a steep fall in household consumption and weaker investments, which was partially offset by trade, preliminary data from the statistical office INSEE showed Tuesday.
Gross domestic product, or GDP, grew 0.1 percent quarter-on-quarter following a 0.2 percent increase in the third quarter. This was in line with the Bank of France forecast.
This was the worst outcome since the first quarter of 2022, when the economy contracted 0.2 percent, which was followed by a 0.5 percent growth in the three months to June.
Domestic demand, excluding inventories, deducted 0.2 points from growth after adding 0.9 points in the previous quarter.
The negative contribution was due to a sharp decline of 0.9 percent in household consumption, which had grow 0.5 percent in the previous three months.
Food consumption decreased sharply by 1.9 percent, down for a fourth consecutive quarter amid high inflation. As households tried to reduce their very high energy bills, spending on energy slumped 5.5 percent after a 0.3 percent increase in the previous quarter. A mild autumn also contributed to the decline.
Read more: French Private Sector Contracts Modestly In January
Spending on services grew 0.5 percent after a 0.4 percent rise in the previous three months, and was largely led by a 2.0 percent growth in transportation services.
Separate data released by INSEE on Tuesday showed that household consumption of good decreased 1.3 percent month-on-month in December after a 0.6 percent rise in November.
Food products consumption shrank 1.7 percent in December and spending on manufactured good decreased 1.7 percent. Energy consumption grew 0.7 percent.
Gross fixed capital formation grew at a slower rate of 0.8 percent after a 2.3 percent rise in the September quarter.
Foreign trade added 0.5 points to growth in the final three months of 2022, following a negative contribution in the quarter to September.
Imports decreased 1.9 percent after a 3.9 percent gain in the previous quarter. Exports shrank 0.3 percent following a 0.8 percent gain in the third quarter.
Inventory changes contributed negatively to GDP evolution, shaving 0.2 points versus an addition of 0.3 points in the previous quarter.
For the full year 2022, French GDP grew 2.6 percent after a 6.8 percent increase in the previous year. In the Covid pandemic-ravaged year 2020, the economy had shrunk 7.9 percent.
The full-year growth was mainly due to the rebound in activity in the second and third quarters of 2021, as the health crisis receded, INSEE said. Quarter-on-quarter growth was significantly less dynamic over the year 2022, the statistical office added.
The growth overhang for 2023 stands at 0.3 percent at the end of the fourth quarter of 2022, INSEE said.
Earlier on Tuesday, the International Monetary Fund retained France’s growth forecast for this year at 0.7 percent, and raised the estimate for 2022 to 2.6 percent from 2.5 percent. The lender projected 1.6 percent for next year.
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