France’s economy grew faster than expected in the third quarter, expanding 0.5% compared to 0.3% in Q2.

The stronger performance was driven by a surge in exports, particularly from the aerospace sector, while domestic consumption remained flat. The result outpaced forecasts of 0.2%, showing resilience despite fiscal strain.

Exports rose 2.2%, while imports fell slightly, giving France a rare trade surplus boost. Business investment climbed nearly 1%, supported by manufacturing and transport sectors. Economists credited improved global demand for helping offset domestic weakness.

However, weak household spending continues to challenge broader recovery efforts. Inflation remains sticky, prompting consumer caution despite wage growth. Economists say this imbalance highlights France’s dependency on external demand for momentum.

The stronger GDP print offers President Emmanuel Macron’s government some relief amid budget and reform pressures. Still, ratings agencies warn that fiscal consolidation is critical to avoid future credit downgrades. The growth may buy time—but not comfort.

Analysts expect modest progress in coming quarters if exports remain solid. For now, France’s resilience underscores a broader European divide: strong exporters thrive, while domestic-demand economies still struggle to regain pre-pandemic vitality.

Source: Reuters