French Economy Grew By 0.2% During Q4, Hit By Paris Terror Attacks

France’s economy grew by 0.2 percent during the fourth quarter of 2015, according to the first estimates announced Friday. French gross domestic product (GDP) for the whole of 2015 rose by 1.1 percent, up from 0.2 percent in 2014, the preliminary data showed.

The first estimates for the GDP were released by France’s National Institute of Statistics and Economic Studies (Insee). While the gross fixed capital formation (GFCF) went up to 0.8 percent, from 0.1 percent in the third quarter, household consumption fell to -0.4 percent during the fourth quarter from 0.4 percent in the preceding quarter. Exports increased from -0.6 percent to 0.6 percent but imports went up as well, from 1.5 percent to 1.6 percent, resulting in foreign trade balance to contribute negatively to the GDP by -0.3 percent.

The increase in production, from 0.3 percent in the third quarter to 0.5 percent, was led by the manufacturing sector, which rose from 0.2 percent to 0.9 percent, according to the data. Construction activity grew by 0.7 percent, after being in decline for the last eight quarters. Over the year, total production went up by 1.3 percent, with manufacturing increasing by 1.4 percent and market services by 1.9 percent, while the construction sector shrunk by 2.6 percent.

The fall in household consumption saw the impact of a sharp drop in expenditure on energy (gas, electricity and refined petroleum products), which fell by 3.5 percent during the quarter after increasing 1.8 percent in the third quarter. Insee ascribed the significant drop to temperatures remaining above their seasonal average. However, for the year 2015, household consumption rose by 1.4 percent.

The terror attacks in Paris last November contributed to the fall in household consumption figures, according to a Bloomberg report. Households held off spending and companies like Air France-KLM Group and hotelier Accor reported reduced demand following the Nov. 13 attacks, said the report.

“The attacks were a big shock. It should be temporary — that’s the good news,” Francois Cabau, an economist at Barclays in London, told Bloomberg.

Led by investments in the transport sector, which went up by 4.9 percent during the fourth quarter, the overall investment in manufactured goods accelerated by 1.7 percent. Investment in construction increased — for the first time since the third quarter of 2013 — by 0.5 percent. Over the year, GFCF was almost stable at -0.1 percent.

Foreign trade balance dampened GDP growth for the year, contributing negatively by 0.2 percent through 2015. However, the number was better than 2014 when external balance contributed -0.5 percent to the GDP.

Change in inventories contributed 0.5 percent to GDP growth during the quarter, compared with 0.6 percent in the third quarter. Stockpiling accounted for 0.2 percent of GDP growth during the entire year.

France, eurozone’s second-largest economy, grew slower than its neighbors Germany, which grew 1.7 percent in 2015, and United Kingdom, whose GDP for the year rose by 2.2 percent. Amid a higher-than-EU-average unemployment rate of 10 percent, French President François Hollande recently announced a state of “economic emergency” in the country.

Insee also confirmed the GDP growth for the third quarter at 0.3 percent. It announced it would release the second estimate for the fourth quarter on Feb. 26.