France outperforms with strongest growth in nearly two years

European Union data released on Wednesday shows a surprisingly strong performance in France as growth picked up to 0.6 per cent in the first quarter of 2015.

French Minister of Finance Michel Sapin, Brussels, Belgium, 7 May 2015. Reuters/Eric Vidal

“This first figure is very encouraging,” said French Finance Minister Michel Sapin. “Our growth perspectives for 2015 are today clearly comforting.”

France's economic growth picked up to 0.6 per cent from 0 per cent at the end of last year,  the strongest growth since the second quarter of 2013, said the INSEE national statistics office.

The better-than-expected figures in France suggest that the French economy could grow faster over the whole year than the 1 per cent estimated.

Analysts warned the French economy still faces problems.

“The French result exaggerates economic momentum,” said Stefan Kipar, an economist at Bayerische Landesbank in Munich.

“Growth is only supported by strong private and government consumption, which seems to have been primarily supported by a weaker oil price. Investment and trade once again disappointed,” he added.

The growth in the eurozone strengthened to 0.4 per cent in the first quarter across all the 28 countries of the EU, although the eurozone has benefitted from sharply lower oil prices, a weakened euro and increasing European Central Bank stimulus.

All the major eurozone economies have improved economic performances except Germany where growth slowed to 0.3 per cent from 0.7 per cent.

Efforts by the ECB to ward off deflation in the eurozone appear to have had an effect with inflation ticking up in Germany and France, respectively with consumer prices rising by 0.3 per cent in Germany and 0.1 per cent in France.