29 Oct 2021
The French economy grew at a quicker-than-forecast 3% in Q3, according to preliminary data published on Friday.
The growth has been fuelled by a rally in consumer spending and exports as the economy rebounds from the pandemic.
According to Finance Minister Bruno Le Maire on France Info radio, the figure was an “exceptional result” that revealed the economy was heading in the right direction.
A Reuters survey of 24 analysts had predicted 2.1% growth for the third quarter.
In addition, the INSEE national statistics agency stated Q3 growth meant the French economy was nearing its level seen before the outbreak of the Covid pandemic.
Whereas ING investment bank analysts said the quarter three figures are “excellent news” yet they cautioned they could represent a year-high as the global economy tackles inflationary worries and supply chain issues: “The peak has been reached and from now on, economic growth will start to slow,” ING said.
Rocketing energy prices this month saw France’s EU-harmonized rate of inflation increase to 3.2% year-on-year, compared to 2.7% in September, as the cost of energy rose 20.1%, according to INSEE. Month-on-month prices increased 0.5%.
Moreover, central banks across the globe have indicated policy tightening amid escalating prices. That said, President of the European Central Bank, Christine Lagarde on Thursday pushed back against market bets price pressures would lead to a rate hike next year.
She referred to higher energy prices, a worldwide discrepancy between recovering demand and supply and other effects such as a cut in sales taxes in Germany as the three key factors temporarily driving eurozone inflation.
INSEE forecasts the French economy to grow 6.25% for this year.