The French economy is flirting with recession following an unexpected decline in gross domestic product (GDP) during the third quarter. According to preliminary estimates released on October 30 by the National Institute of Statistics and Economic Studies (Insee), GDP fell by 0.1%, defying expectations of a slight increase. This contraction follows a stagnation of 0.0% in the second quarter and a 0.2% drop in the first quarter, marking the second time this year that growth has entered negative territory.
Economy Minister Roland Lescure reacted to the figures by stating that the French economy is currently at a standstill. While he asserted that France is not heading toward a crisis, he warned that without the fiscal adjustment included in the budget, the country will hit a wall. However, these necessary budget cuts risk further eroding purchasing power, which could subsequently dampen consumption and economic activity even more.
Although the current data does not yet constitute a technical recession, defined as two consecutive quarters of negative growth, experts note the situation is precarious. Mathieu Plane, an economist at the French Institute of Economics (IFE), indicated that only a slight downward revision of the second-quarter figures would push France into a technical recession. Revised accounts are scheduled to be published at the end of November.
Sources: Le Monde Économie.