The astonishing growth in France and Europe

In the first quarter of 2024, France surprised economists by posting growth of 0.2% of its gross domestic product (GDP). This result exceeds initial forecasts which predicted economic stagnation, and suggests a more robust recovery than expected.

European growth supported by the main economies

This momentum is mainly supported by an increase in household consumption and business investment, highlighting renewed confidence in the country’s economic potential. The Banque de France, having anticipated this movement, had adjusted its forecasts upwards, unlike INSEE which had forecast zero growth between January and March.

This French recovery takes place in a generally favorable European context. Germany, Spain and Portugal also recorded growth rates above expectations, with 0.2%, 0.7% and 0.7% growth respectively in the first quarter of 2024. These performances are particularly notable being given that several of these economies were emerging from a period of contraction or very moderate growth.

This renewed activity in France and elsewhere is crucial for the European economy, as it could help stabilize and stimulate the euro zone as a whole. Every tenth of a growth point is essential to achieve the growth targets set by the French government at 1% for the current year. This threshold is ambitious, but current signs of resilience could bode well for the rest of the year.

The American case

Caution remains in order, however, as indicated by Pierre Jaillet, economist and researcher associated with the Jacques Delors Institute. “ We must be quite modest and humble about the figures in the first quarter and above all not get carried away with a small recovery higher than forecasts. », he warns AFP, suggesting that these encouraging results should not mask the persistent structural challenges.

In the United States, the economic situation in the first quarter of 2024 contrasts with the momentum observed in Europe. US GDP growth slowed to 1.6% annualized, representing a notable deceleration compared to 3.4% recorded during the last quarter of 2023. This slowdown is lower than the expectations of analysts who forecast growth of 2.2%, according to the Market Watch consensus.

This modest performance is adjusted for inflation, meaning the figures reflect real economic growth, stripped of the effects of rising prices. Although this 1.6% growth could have sparked some optimism among investors, hoping for a possible interest rate cut by the Fed in response to a slowing economy, underlying inflation, excluding changes in the energy and food, turned out to be stronger than expected.

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