Read news from:
Austria
SHARE
COPY LINK

ECONOMY

French economy stalls as Germany sees growth

There was some bad news for France on the economic front on Friday, when new figures revealed that the struggling economy had stagnated in the second quarter of 2015, in contrast to their German neighbours.

Published: 14 August 2015 08:22 CEST
French economy stalls as Germany sees growth
The French finance ministry at Bercy on the River Seine is optimistic despite stagnation of growth. Photo: AFP

The French economy once again ground to a halt in the second quarter of 2015, underlining the fragility of the recovery in the eurozone.

France's economy stagnated in the second quarter after an encouraging 0.7 percent rise in GDP in the first quarter, with investment falling away, according to official statistics released Friday.

Finance Minister Michel Sapin insisted that the figure, despite being less than initially predicted, was still in line with the government’s objectives.

“After a very dynamic first quarter, the level of activity has been maintained,” said Sapin. “At the end of the first semester, the growth achieved is 0.8 percent, which is in line to hit our target of 1 percent for the year 2015, said Sapin.

But the government, which has been pinning its hopes on growth to tackle the country's chronic unemployment problems, will not have been cheered by slowing growth in investment, which rose only 0.2 percent compared to 0.6 percent in the first quarter.

Consumer spending also slowed sharply, from a 0.9 percent rise in the first three months of 2015 to only 0.1 percent in the second quarter.

In one good sign, however, the contribution France's exports made to the economy rose by 0.3 percent, while imports slowed by 1.6 percent.Finance Minister Michel Sapin insisted that the second biggest economy in the eurozone was still on course to post 1 percent growth over the year as a whole.

There was slightly better news over the Rhine for Europe’s biggest economy.

Figures revealed on Friday showed the German economy had grown by 0.4 percent, slightly down on the 0.5 percent that was forecast.

Analysts had been projecting marginally stronger growth of 0.5 percent for the second quarter.

“The German economy continued along its positive growth path,” the statisticians said.

“Positive impulses came primarily from foreign trade. Exports grew a lot faster than imports thanks to the weak euro, with goods exports in particular growing strongly.”

But consumer spending and government spending also increased.

 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

SHOW COMMENTS