Germany posted strong growth in the first quarter of the year in stark contrast with France: the euro zone’s second largest economy failed to expand at all and Italy, the third largest, went into reverse.
German quarterly growth of 0.8% marginally exceeded forecasts and was double the pace at the end of 2013. France was expected to pale in comparison but had still been forecast to grow by 0.2%.
Inventory changes and public spending were the only factors which kept the French economy from contracting while Germany’s performance was driven largely by domestic demand.
The figure for the euro zone as a whole is due at 0900 GMT and forecast to show growth of 0.4% on the quarter.
France will now need 0.5% growth each quarter to meet a government forecast for subdued 1% growth in 2014, Natixis Asset Management chief economist Philippe Waechter said.
“France’s public finance plan has been built on the 1% growth forecast. If we don’t achieve it France will not meet its (debt and deficit) targets for 2014 and 2015,” Waechter said.
France is not the only euro zone member in the doldrums.
Italian gross domestic product contracted unexpectedly by 0.1%, denting a fragile recovery begun at the end of last year when the country finally put an end to its longest recession since World War Two. Growth of 0.2% had been forecast.
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