The French economy, one of the largest in the EU, has failed to meet expectations and contracted for the first time under the presidency of Emmanuel Macron in the final quarter of 2019.
France’s real GDP fell 0.1 percent in the fourth quarter, a dramatic drop after an expansion by 0.3 percent in July-September, according to a report published by the French national statistics bureau, INSEE, on Friday. While the agency said that GDP slid just “slightly,” the results are well below the earlier projected 0.2 percent growth.
This brings the full-year economic growth to 1.2 percent in 2019, down from 1.7 percent a year earlier.
French SNCF railway workers on strike near the Gare de Lyon train station, Paris, January 29, 2020 © Reuters / Gonzalo Fuentes
The unexpected slowdown comes due to a decline in both exports and imports, which fell 0.2 percent. One of the negative factors was changes in inventories, meaning that companies are using stocks rather than boosting production. If it had not been for the latter, the French economy would have grown 0.3 percent, analysts say, and it may even see growth in the first quarter of this year.
Massive rallies and protests across France could also take a toll on the economy. Strikes are estimated to cost the French economy 0.1 percent. Political uncertainty slashed the GDP by 0.2 percent, according to the chief economist at Allianz Group, Ludovic Subran.
Italy, the Eurozone’s third largest economy, also posted weak results for the last quarter of 2019 on Friday. Its GDP shrank by 0.3 percent during this period, marking the worst quarterly performance since early 2013.
The contractions of two of the EU’s biggest economies have raised concerns over Europe’s economic health on the day Britain leaves the bloc. Meanwhile, the EU’s official statistical office said that the Eurozone economy is only one percent larger than a year ago. The final quarter of 2019 was weak both for the 19 members of the Eurozone and the entire EU, as the GDP for both gained just 0.1 percent, down from 0.3 percent in July-September.