French output grew slightly in the third quarter — providing some support to the euro area as it grapples with higher interest rates and prolonged manufacturing weakness.
Gross domestic product in the bloc’s second-largest economy rose 0.1% in the three months through September, data Tuesday showed. That’s down from a revised 0.6% in the previous quarter and is in line with expectations.
The numbers come after Germany reported a small drop in GDP that may mark the start of a recession. For the continent as a whole, the picture is mixed. While Spain and Belgium recorded expansions, Austria and Ireland shrank. Figures for the 20-nation euro zone, expected to show stagnation, are due later Tuesday.
Europe faces multiple headwinds. Inflation — while abating — continues to pummel households, and the rate hikes enacted to rein it in are hurting investment. Softer Chinese demand, meanwhile, is curbing industry and governments are starting to withdraw energy-support measures to trim debt levels.
France showed resilience in the earlier part of this year, thanks in part to strong exports. But in the third quarter, foreign sales fell significantly, while consumer spending grew.
That will come as good news for retailer Carrefour, whose revenue growth had slowed as shoppers continued trading down to cheaper brands — despite food inflation easing over the summer.
Finance Minister Bruno Le Maire said the pickup in consumer expenditure, as well as an increase in corporate investment, was positive, confirming that France is on track to hit its 2023 growth target of 1%.
Getting price gains back under control remains the priority, though, he said after the European Central Bank last week pledged to keep monetary policy tight following a streak of 10 rate hikes.
“You can’t have solid growth if you don’t get rid of inflation definitively,” Le Maire said. “Our goal is to go back below 4% inflation from the end of 2023.”
--With assistance from Angelina Rascouet, Ainhoa Goyeneche and Joel Rinneby.
(Updates with finance minister in last three paragraphs.)
