- Exports surged, driven by aeronautics industry
- Corporate investment shrugs off political crisis
- Finance minister urged quick passage of budget
PARIS, Oct 30 (Reuters) - France's economy grew faster than expected in the third quarter as exports surged, due mainly to shipments from the aerospace industry, and as corporate investment perked up despite a political crisis, official data published on Thursday showed.
The euro zone's second-biggest economy expanded by 0.5% after posting 0.3% growth in the second quarter, outshining both Germany and Italy, whose economies stagnated in the period.
France's third-quarter growth easily beat economists' average forecast of 0.2% with none of the 26 economists polled by Reuters expecting a result higher than 0.3%.
The national statistics office INSEE said in a preliminary GDP report for the period that exports jumped 2.2% in the third quarter from the previous quarter while imports fell 0.4%, which meant foreign trade boosted growth by 0.9 percentage points.
The surge in exports more than offset a drop in business inventories, which put a 0.6 percentage point drag on growth. Firms drew down stocks of goods in the quarter as they rushed to ship products ahead of the Trump administration's new 15% tariffs on EU imports.
CORPORATE INVESTMENT OFFSETS WEAK CONSUMER SPENDING
Meanwhile, corporate investment grew 0.9% in the quarter, helping to offset weak growth of just 0.1% for consumer spending - France's traditional motor for growth.
France sank deeper into political crisis during the third quarter as opposition parties ousted President Emmanuel Macron's previous prime minister just as the government was preparing to send its 2026 budget to parliament, triggering downgrades from three ratings agencies.
A new minority government led by Macron loyalist Sebastien Lecornu is racing to pass the budget in France's fractured parliament, where lawmakers have added amendments that could raise taxes on companies by billions of euros if they survive in the Senate.
"Despite political upheavals and international uncertainties, our companies are investing, exporting, and driving the country forward," Finance Minister Roland Lescure said in response to the GDP data, which he described as "remarkable".
"The swift adoption of a budget that preserves the confidence of businesses and households will be crucial to maintaining this momentum," he added.
Economists said the strong third-quarter performance raised hopes that the French economy could remain relatively insulated from the current political instability.
"Political and budgetary uncertainty is likely to weigh on growth momentum. Still, improving business sentiment and consumer confidence in October suggest the impact could be smaller or delayed," ING senior economist Charlotte de Montpellier said in a research note.
Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta, Bernadette Baum and Gareth Jones
Source: Reuters