The FINANCIAL — French economic growth ground to a halt in the second quarter of 2015, indicating that a fall in oil prices and monetary stimulus aren’t providing the momentum for a strong enough recovery to quickly reduce debt and unemployment, according to Nasdaq.
Gross domestic product in the eurozone’s second-largest economy was unchanged in the second quarter from the first, national statistics agency Insee said on August 14. That was below economist forecasts for a 0.2% rise and marked a sharp slowdown from the 0.7% jump in the first quarter. Insee previously estimated a 0.6% rise in the first quarter.
Growth in consumer spending–the main driver of the French economy–slowed to 0.1% in the second quarter from 0.9% in the first. Investment declined 0.3% as households and the state cut back.
The French numbers kick off a morning of eurozone GDP figures that are expected to show little to no improvement in the currency bloc’s economic growth rate since the first quarter of the year.
Without a stronger recovery, countries in the eurozone are struggling to tackle high debt and unemployment. In France, unemployment has been above 10% for more than two years and public debt is at a record high–more than 97% of annual economic output.
Sluggish economic growth, rising debt and high unemployment are raising concerns that France and other eurozone countries are resistant to strong economic tailwinds. The tumble in oil prices over the past 12 months should have cut costs for consumers and businesses, spurring them to spend more. And the economy is also getting a boost from the European Central Bank’s quantitative-easing program, which has driven down borrowing costs and weakened the euro, making eurozone exports more competitive on global markets.
Economists say the missing ingredient for a stronger recovery in France may be confidence. Until consumers see a fall in unemployment and businesses see a tangible uptick in demand, they will continue to hold off spending and investing, said Julien Manceaux, an economist at ING.
“There is the beginning of a recovery, but because the job market isn’t following and fueling hope, it could collapse like a soufflé,” Mr. Manceaux said.