French finance minister Michel Sapin said the country’s economy was still on track to reach the government’s forecast of 1% growth for the year.
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Figures from the National Institute of Statistics and Economic Studies, Insee, stated French GDP was “stable”, in spite of household spending falling sharply to 0.1 per cent from 0.9 per cent in the first quarter.
“France appears to have relapsed into its role of the sick man of [the] eurozone, with its economy stagnating after a 0.7% growth spurt in the first three months of the year, a revival which always looked too god to be true”. Instead the pace of quarterly growth slowed a little, to 0.3%, leaving output 1.2% higher than a year ago.
European stock markets fought for direction Friday after gross-domestic-product data showed the eurozone’s economic recovery lost momentum in the second quarter.
In the first quarter, Germany’s economy exapnded by 0.3 percent.
Exports also grew strongly in Germany, helped by the weaker euro. The numbers pose a downside risk for projections for a 0.4 percent expansion in the currency bloc.
Though Greece may only account for around 2 percent of the eurozone’s annual GDP, it has proved a headache for its partners in the region.
The European Central Bank is counting on a recovery in Europe to push up inflation, which is at a record low. Eurozone unemployment was 11.1% in June, more than double the rate in the U.S. and far higher than in the U.K.as well.
Many economists reckon the second quarter growth was due to people spending in anticipation that the government would put limits on cash withdrawals – something it did just at the end of the second quarter. Greece is the exception, as it is expected to slump back into recession under the strain of cash withdrawal limits and budget cuts demanded by creditors in return for a new bailout. China sent shock waves through global markets on Tuesday by devaluing the yuan.
“The weaker than expected increase is largely attributable to France, where the economy has once again ground to a halt”, said Chris Williamson, chief economist at Markit, in a note.
Zalando SE, the German online fashion retailer, said on Thursday that sales will rise as much 31 percent this year and vowed to hire more staff and build warehouses to spur growth.
“Neither the Chinese growth slowdown nor the events in Greece threw German companies off track”, said Andreas Rees at UniCredit.
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Ahead of the data, the euro held steady against its major rivals.
