France's economic growth accelerated more than economists forecast in the first quarter as stronger exports more than offset weaker consumer spending.
Gross domestic product in the euro region's second-largest economy expanded 0.6 percent from the previous quarter, when it grew 0.3 percent, national statistics office Insee said today in Paris. Economists expected growth of 0.4 percent, according to the median of 15 estimates in a Bloomberg News survey.
Europe's economy has shown resilience in the face of a U.S. housing recession that pushed up borrowing costs globally. German growth also accelerated to the fastest pace in 12 years in the first quarter. Growth may ease as the euro's 14 percent gain against the dollar in the past year takes a toll on exports just as companies face oil costs close to $125 a barrel.
"For now the international crisis hasn't weighed on French growth,'' said Mathilde Lemoine, chief economist at HSBC France. "But trade and corporate investment are set to slow down, because global demand is getting less dynamic.''
The U.S.-led slowdown prompted the French government to reduce in March its GDP growth forecast for 2008 to 1.7 percent to 1.9 percent, compared with a prediction of ``close to'' 2 percent.
Bonds fell after the French and German reports, with the yield on the 4 percent bond due April 2018 gaining 3 basis points to 4.39 percent. The euro rose 0.3 percent to $1.5526 at 10:00 a.m. in Paris.
Exports Gain
In the quarter, exports rose 3.1 percent, after slipping 0.2 percent in the last three months of 2007. Imports climbed 1.9 percent, meaning that net trade added 0.3 percentage point to GDP growth in the period, Insee said.
Schneider Electric SA, the world's biggest maker of circuit breakers, said last month that emerging-market expansion helped first-quarter revenue gain 11 percent.
"Our performance is fueled by our two engines for growth: broad exposure in emerging countries and unique positioning in energy efficiency,'' Chief Executive Officer Jean-Pascal Tricoire said in the April 21 statement.
Consumer spending growth slowed to 0.1 percent from 0.6 percent in the fourth quarter. Stocks were unchanged after a drop the preceding quarter. Corporate investment climbed 1.8 percent, after 1.2 percent in the last quarter.
Still, growth is already showing signs of a slowdown as the inflation rate hovers near a 12-year high. French retail sales fell in April by the most in more than two years and consumer confidence reached a record low that month. Exports slumped in March, when industrial production slipped.
"The quarter's rebound was mainly due to overproduction, which is going to get corrected,'' said Sylvain Broyer, an economist with Natixis in Frankfurt. "We should expect a slowdown and growth around 1.5 percent to 1.8 percent.''
Swelling Deficit
Fourth-quarter growth was revised lower from the previous estimate of 0.4 percent. From a year earlier, the economy expanded by 2.2 percent in the first quarter, Insee said.
Separately, the institute said the economy grew 2.2 percent in 2007, the same pace as 2006, as corporate investment rose and households gained purchasing power and increased their savings. Adjusted for working days, GDP expanded 2.1 percent in 2007, down from 2.4 percent in 2006.
Hurt by deteriorating finances of local governments, the country's total public deficit swelled by 7.7 billion euros to 50.3 billion euros, representing 2.7 percent of GDP in 2007 from 2.4 percent in 2006. Public debt amounted to 1.21 trillion euros at the end of last year, amounting to 63.9 percent of GDP, up from 63.6 percent at the end of 2006.
Public spending amounted to 52.4 percent of GDP in 2007, down from 52.7 percent the previous year. The tax burden fell to 43.3 percent of GDP in 2007 from 43.9 percent in 2006.
Gross domestic product in the euro region's second-largest economy expanded 0.6 percent from the previous quarter, when it grew 0.3 percent, national statistics office Insee said today in Paris. Economists expected growth of 0.4 percent, according to the median of 15 estimates in a Bloomberg News survey.
Europe's economy has shown resilience in the face of a U.S. housing recession that pushed up borrowing costs globally. German growth also accelerated to the fastest pace in 12 years in the first quarter. Growth may ease as the euro's 14 percent gain against the dollar in the past year takes a toll on exports just as companies face oil costs close to $125 a barrel.
"For now the international crisis hasn't weighed on French growth,'' said Mathilde Lemoine, chief economist at HSBC France. "But trade and corporate investment are set to slow down, because global demand is getting less dynamic.''
The U.S.-led slowdown prompted the French government to reduce in March its GDP growth forecast for 2008 to 1.7 percent to 1.9 percent, compared with a prediction of ``close to'' 2 percent.
Bonds fell after the French and German reports, with the yield on the 4 percent bond due April 2018 gaining 3 basis points to 4.39 percent. The euro rose 0.3 percent to $1.5526 at 10:00 a.m. in Paris.
Exports Gain
In the quarter, exports rose 3.1 percent, after slipping 0.2 percent in the last three months of 2007. Imports climbed 1.9 percent, meaning that net trade added 0.3 percentage point to GDP growth in the period, Insee said.
Schneider Electric SA, the world's biggest maker of circuit breakers, said last month that emerging-market expansion helped first-quarter revenue gain 11 percent.
"Our performance is fueled by our two engines for growth: broad exposure in emerging countries and unique positioning in energy efficiency,'' Chief Executive Officer Jean-Pascal Tricoire said in the April 21 statement.
Consumer spending growth slowed to 0.1 percent from 0.6 percent in the fourth quarter. Stocks were unchanged after a drop the preceding quarter. Corporate investment climbed 1.8 percent, after 1.2 percent in the last quarter.
Still, growth is already showing signs of a slowdown as the inflation rate hovers near a 12-year high. French retail sales fell in April by the most in more than two years and consumer confidence reached a record low that month. Exports slumped in March, when industrial production slipped.
"The quarter's rebound was mainly due to overproduction, which is going to get corrected,'' said Sylvain Broyer, an economist with Natixis in Frankfurt. "We should expect a slowdown and growth around 1.5 percent to 1.8 percent.''
Swelling Deficit
Fourth-quarter growth was revised lower from the previous estimate of 0.4 percent. From a year earlier, the economy expanded by 2.2 percent in the first quarter, Insee said.
Separately, the institute said the economy grew 2.2 percent in 2007, the same pace as 2006, as corporate investment rose and households gained purchasing power and increased their savings. Adjusted for working days, GDP expanded 2.1 percent in 2007, down from 2.4 percent in 2006.
Hurt by deteriorating finances of local governments, the country's total public deficit swelled by 7.7 billion euros to 50.3 billion euros, representing 2.7 percent of GDP in 2007 from 2.4 percent in 2006. Public debt amounted to 1.21 trillion euros at the end of last year, amounting to 63.9 percent of GDP, up from 63.6 percent at the end of 2006.
Public spending amounted to 52.4 percent of GDP in 2007, down from 52.7 percent the previous year. The tax burden fell to 43.3 percent of GDP in 2007 from 43.9 percent in 2006.
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