French economy posts timid, deceptive rebound in the second quarter of 2025

LeMonde

6 days ago

The French economy proved more resilient than expected in the second quarter of 2025. Gross domestic product (GDP) growth, according to figures published by the National Institute of Statistics and Economic Studies (INSEE) on Wednesday, July 30, stood at 0.3%, up from 0.1% in the first quarter. This represents the country's best quarterly performance since the third quarter of 2024. "It's good news," said Economy Minister Eric Lombard, speaking on RTL radio Wednesday morning. "The 0.3% growth we saw in the second quarter clearly shows that, at a time when the tariffs were already in effect, companies are holding up" against the shock of the trade war.
The statistics, however, tell a somewhat different story. Final domestic demand, which includes both household consumption and business investment, was flat in the second quarter after a slight decline of 0.1% in the first. The domestic French economy was, therefore, stagnant throughout the first half of the year. "The figures aren't good, demand is weak, consumption is stabilizing," said Maxime Darmet, an economist at Allianz Trade. "There is no strong drive" in the French economy, added Stéphane Colliac, an economist at BNP Paribas.
The only truly positive factor came from companies' inventories, which contributed 0.5 percentage points to growth. "It is, above all, inventories that explain the second quarter growth," said Marie Leclair, head of the national accounts department at INSEE. Foreign trade, meanwhile, had a negative impact on growth, with imports rising faster (+0.8%) than exports did (+0.2%).
Unusually high savings
The slight growth rebound in the second quarter was therefore primarily due to technical factors. Nevertheless, it should allow annual growth to slightly exceed the INSEE's forecast of 0.6% for 2025, possibly reaching 0.7%, according to Leclair.
Looking at the details, household consumption remained weak, growing 0.1% after having dropped by 0.3% in the first quarter. Even this slight improvement was deceptive: It was partly driven by food consumption, as Easter fell in April in 2025, thereby counting toward the second quarter, whereas it came in March in 2024, thereby being recorded in the first quarter. The only real piece of good news was a strong rebound in the service sector (+0.6%), particularly in the hotel and hospitality sectors.