French GDP edges up 0.4% in Q1 as economy returns to growth

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PARIS: Despite reimposed restrictions to curb a surge in COVID-19 infections, the French economy returned to growth in the first quarter, sustained by consumer spending, official data showed Friday.
Gross domestic product (GDP) edged up 0.4% from the final three months of 2020, a year that saw coronavirus restrictions plunge countries worldwide into historic recessions, the Insee statistics agency said. “However, the economic rebound was limited, as GDP is still 4.4% below its level of the fourth quarter 2019,” before the COVID-19 pandemic began raging across Europe, the agency said.
Insee had originally forecast 1% growth for the quarter, but in March French authorities began ordering business closures and travel bans in several regions ahead of a third national lockdown implemented in April. President Emmanuel Macron announced Thursday a phased reopening of the country by the end of June, hoping a vaccination drive will let shops, restaurants and cultural venues find a semblance of normalcy.
Consumer spending dropped 1.1% in March, but managed to stage a “moderate rebound” of 1.2% for the first quarter as a whole, Insee said.
“Households remain confident, they have high levels of savings and businesses are also sitting on large cash piles,” said Selin Ozyurt, senior economist at the credit insurance and research group Euler Hermes.
“So, if the government can vaccinate people quickly, we could see a very strong rebound,” she said, deeming the government’s target of 5% growth this year attainable.
Officials have injected billions of euros to keep businesses afloat despite the closures, and this week France and other countries submitted plans for spending their share of the bloc’s coronavirus recovery fund worth 750 billion euros ($906 billion).