French consumer spending falls in October
The 0.4 percent dip in consumer spending may be the first indication that France will experience negative growth in 2009.
21 November 2008
PARIS – French consumers kept a firm hold on their wallets in October as they cut back on spending in the face of tighter credit conditions and unemployment fears, official figures showed Friday.
Household spending on manufactured goods fell 0.4 percent in October as compared with October 2007 when spending rose 0.7 percent, the national statistics institute INSEE reported.
Analysts said that as consumer spending is a major driver of economic activity, French growth prospects are in doubt.
"The figure published this morning confirms that after a pick-up in the third quarter, gross domestic product growth will be negative in the fourth quarter," said Nicolas Bouzou of the economic research group Asteres.
"We're expecting negative growth of 0.4 percent ahead of a 0.5 percent contraction for all of 2009."
He attributed October's spending slide in part to a reduction in the availability of consumer credit for households, whose purchasing power is under siege.
At Global Equities, economist Marc Touati said that hovering ominously over the French economy was "an increase in unemployment that dampens the spending appetite for households."
But Frederique Cerisier of the bank BNP Paribas said consumers could take heart from an expected "sharp fall in inflation in the months ahead, which should boost household morale."
[AFP / Expatica]