French economy ekes out meagre growth in first quarter on stock-building

PARIS (Reuters) - France's economy grew slightly in the first quarter as stagnant domestic demand and weak foreign trade were offset by companies rebuilding inventories, preliminary data from the INSEE statistics agency showed on Wednesday.

The euro zone's second-biggest economy grew by 0.1% in the first three months of the current year after a slight drop of 0.1% in the fourth quarter of 2024, INSEE said in its quarterly GDP report.

A Reuters poll of 29 economists had on average forecast a 0.1% growth in gross domestic product in the first quarter, with estimates ranging from 0.0% to 0.3%.

The reading marks a weak start for what is likely to be a turbulent year for the French economy, although Finance Minister Eric Lombard said after the data were released that the government's 0.7% growth forecast was still in reach.

"The outlook for 2025 has clearly darkened and become more uncertain as a result of (U.S. President) Donald Trump's trade war. The government's desire to limit the public deficit will also have an impact," economist Sylvain Bersinger from consultancy Asteres said.

In the first quarter, consumer spending - traditionally the driver for French growth - was unchanged from the end of 2024 as car sales slid after a green subsidy scheme was reined in, while business investment eased 0.1%, INSEE said.

Meanwhile, foreign trade subtracted 0.4 percentage points from growth as imports grew 0.4% while exports fell 0.7%, despite the delivery of a cruise ship.

Inventories added 0.5 percentage points to growth due in particular to stock-building by chemicals, pharma and agro-food companies, INSEE said.

(Reporting by Leigh Thomas in Paris and Michal Aleksandrowicz in Gdnask; Editing by Christian Schmollinger and Andrew Heavens)