French Economic Growth Slows Amid Political Uncertainty

By William Horobin Features Dow Jones Newswires

French economic growth slowed at the start of the year as mild weather decreased demand for heating and exports dropped.

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French gross domestic product expanded 0.3% quarter-on-quarter in the three months through March after growing 0.5% at the end of 2016, statistics agency Insee said. Economists polled by The Wall Street Journal had forecast a 0.4% increase.

The slightly weaker-than-expected growth rate came as the country braced for a high-stakes presidential election that puts France at a crossroads between deeper economic integration in the eurozone, or retreat.

During the campaign, candidates vowing to implement tough economic reforms and keep France in the eurozone have sparred with antiestablishment rivals threatening to pull France from the currency area.

Investors at times sold French assets as they fretted over the strong poll numbers for two euroskeptic candidates: National Front leader Marine Le Pen and far-left contender Jean-Luc Mélenchon.

Despite the high level of political uncertainty, total investment rose 0.9% quarter-on-quarter, driven by a 1.3% rise in business investment. Consumer spending still eked out 0.1% growth quarter-on-quarter despite a 3.8% tumble in spending on energy amid mild weather. But overall growth was held back by a 0.7% quarter-on-quarter decline in exports.

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After the first round of voting in France's election Sunday, the field of candidates was trimmed to two: Ms. Le Pen and pro-European centrist Emmanuel Macron. Mr. Macron garnered the most votes in the first round and polls show him winning the second round handily, with around 60% of the vote.

The slowdown in France casts some doubt over the strength of the eurozone economy in the first quarter. Business surveys have pointed to a pickup in growth during the first quarter, and have been cited by the European Central Bank as evidence that the recovery is becoming more "solid." Official figures for gross domestic product in the currency area will be released Wednesday.

Write to William Horobin at William.Horobin@wsj.com

(END) Dow Jones Newswires

April 28, 2017 02:23 ET (06:23 GMT)