French economy stalls in Q2 as inflation accelerates
France's economic growth stalled in the second quarter, statistics office Insee said Friday, revising down its initial forecast while reporting a sharp rise in inflation in August.
GDP growth was flat in the quarter, instead of the 0.2 percent growth Insee first reported last month.
That followed a 0.2 percent decline in the first quarter -- also a downward revision from the previous estimate of 0.1 percent.
"These revisions reflect the even more deteriorated state of agricultural production compared with the information available at the end of July," Insee said.
The French economy has been slowing since the third quarter of last year, hit by weak consumer spending and, more recently, the surge in energy prices from the war against Iran.
In June, the country was hit by an unprecedented early summer heatwave that took a heavy toll on farmers, Finance Minister Roland Lescure said Friday.
"Harvests are likely to be very tough for certain products, and in certain regions... the impact is absolutely horrific, enormous," Lescure told a business conference in Paris.
Insee said household purchasing power fell 0.5 percent in the second quarter after slipping 0.1 percent in the first.
It also reported Friday that inflation in the EU's second-biggest economy rose to 2.4 percent in August after 2.1 percent in July.
The data puts further pressure on the French government as it tries to negotiate steep spending cuts for the 2027 budget, aiming to reduce a budget deficit that stood at 5.1 percent of GDP last year, well above the three-percent limit set for members of the eurozone.
"These figures suggest that the French economy came very close to a technical recession in the first half of the year," said Charlotte de Montpellier, an economist at ING, referring to two consecutive quarters of economic contraction.
She said the government's forecast for GDP growth of 0.7 percent this year "is now out of reach", predicting a 0.5 percent increase but "with risks tilted to the downside".
