France's Q2 GDP Growth Revisions Cast a Shadow on Eurozone Economy

The French economy showed zero quarter-on-quarter growth in Q2, according to final figures released by INSEE on August 28. This is a downward revision from the initial estimate of 0.2% expansion.

Despite the stagnant performance, exports surged 2.9% quarter-on-quarter, driven primarily by aircraft exports. Consumer spending also turned positive, rising 0.3% after a decline in Q1.

In contrast to the economic stagnation, inflationary pressures are intensifying. The consumer price index (CPI) rose 2.4% year-on-year in August, accelerating from 2.1% in July. The EU-harmonised index of consumer prices (HICP) also increased 2.7%, exceeding market expectations.

The European Central Bank will face a challenging balancing act between supporting growth and containing prices. With eurozone inflation still above the medium-term target, French price trends will be closely watched as an input for future rate-cut decisions.