France’s GDP surprises to the upside, but household savings keep rising

 

France’s GDP surprises to the upside, but household savings keep rising

France’s economy recorded stronger-than-expected growth, supported by a moderate recovery in consumption and positive contributions from parts of the services sector. The result came as a surprise in a broader European context marked by weak economic momentum.

🔹 Growth beats expectations

• GDP expanded more than forecast, driven by domestic demand and a temporary improvement in investment.

• Public spending and service-related activities, including tourism, also helped support growth.

• The figures offer a reassuring signal after several quarters of sluggish performance.

🔹 A persistent paradox: higher household savings

• Despite better growth, households continue to save more.

• Elevated savings reflect ongoing caution, shaped by past inflation, job market uncertainties, and high borrowing costs.

• This behavior continues to weigh on consumption, limiting a stronger economic rebound.

🔹 What it means going forward

• The GDP surprise highlights the resilience of the French economy, though it remains fragile.

• As long as savings stay high, growth is likely to remain moderate.

• Future momentum will depend on developments in purchasing power, inflation, and financial conditions.