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Key Data Preview
Chart 9: French GDP Growth (contribution % q/q)
2.10
1.40
0.70
-0.00
-0.70
-1.40
-2.10
Total GDP (% q/q)
Exports
Investment
Imports
Invent. Ch.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009
Sources: Reuters EcoWin Pro, INSEE, BNP Paribas
PCE
Volume SA-/WDA Q1 (f) Q4 Q3 Q1 09
GDP % q/q 0.2 0.6 0.2 -1.3
GDP % y/y 1.3 -0.3 -2.3 -3.4
PCE % q/q -0.2 1.0 0.1 0.1
External contrib. (pt) 0.0 -0.8 0.3 -0.1
Key Point:
GDP growth should be better balanced in Q1,
although investment remains the weakest link.
2.1
1.4
0.7
-0.0
-0.7
-1.4
-2.1
BNP Paribas Forecast: Slowing
France: GDP First Estimate (Q1)
Release Date: Wednesday 12 May
The growth structure in Q4 was distorted by the car
purchase incentive. This boosted private consumption and
imports. We expect this special factor to unwind in Q1.
While consumption was only driven higher by car sales in
the last quarter of 2009, demand was broad based.
According to the retail sales data, we should get a
contraction in car sales but also in other manufactured
goods (ex-auto sales declined 0.2% in Q1 after soaring
1.5% in Q4). Nevertheless, we expect consumption of
services to support total PCE so that this item should
continue to contribute positively to growth, as it did in each
of the preceding four quarters.
Inventory change contributed a massive 1 percentage point
to GDP growth in Q4. We do not expect this to be
repeated, but given that inventories continued to contract in
Q4 (by as much 1.1% of GDP after 2.0% in Q3), a milder
drop would result in another positive contribution to growth.
We are less optimistic about the investment outlook. The
uncertain level of demand, massive overcapacity in
manufacturing and the adverse weather are the three main
factors likely to have pushed investment further down in
Q1. Altogether, we forecast GDP growth of 0.2% q/q, a
more conservative view than that of INSEE or BoF (they
both expect a 0.4% gain).
Chart 10: French Inflation (Energy HICP Components)
200
180
160
140
120
100
80
Natural Gas
Electricity
EMU
France
EMU
France
96 97 98 99 00 01 02 03 04 05 06 07 08 09
Sources: Eurostat, Reuters EcoWin Pro
% Apr (f) Mar Feb Apr 09
Total (nsa) m/m 0.32 0.48 0.56 0.16
Total (nsa) y/y 1.74 1.58 1.28 0.13
Core (sa) m/m -0.03 -0.05 0.48 0.09
Core (sa) y/y 1.56 1.68 1.85 1.61
Ex-Tob. index 119.97 119.58 118.99 118.00
Key Point:
Energy should be the only reason for the inflation
pick-up we expect. Core inflation should ease again
in April.
BNP Paribas Forecast: Up Again
France: Consumer Price Index (April)
Release Date: Wednesday 12 May
We expect French inflation to have accelerated by 0.16
percentage points in April to 1.74%, the highest level since
November 2008. This is entirely due to energy, whose
contribution to inflation is forecast at 1.0pp. The regulated
price for natural gas, on which more than 90% of
households still rely, was hiked by 9.7%. This jump will add
about 0.1pp to headline inflation and should close the gap
between French and eurozone gas prices as shown in the
chart. The gap will remain for electricity. For oil products,
no such gap existed and we forecast French prices to
increase in line with the eurozone’s, adding another 0.14pp
or so to headline inflation.
Food prices were pushed higher by particularly cold
weather this winter; we now expect this trend to correct.
Lower fresh food prices should compensate the rising trend
for manufactured food, leaving total food inflation nearly flat
at around 0.6% to 0.7% y/y.
Core inflation is forecast to ease. Contrary to some other
countries, French inflation is not significantly affected by
the timing of Easter. It did not push inflation higher in
March and consequently we do not expect a correction in
April. Services, helped by declining wage costs, should be
the main factor for the moderate 0.1 point decline of
underlying inflation.
Market Economics 7 May 2010
Market Mover
75
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