France: GDP growth increased by +0.3% in Q2 and could surprise on the upside in 2024

French GDP growth increased by +0.28% quarter-on-quarter in the 2 nd quarter , in line with our expectations and slightly above the Bloomberg consensus (+0.2%), after +0.3% in Q1 and +0.4% in Q4 2023 (both figures were revised up by +0.1 pp). GDP growth was mainly driven by positive contributions from foreign trade for +0.2 pp (strong exports and stable imports ) and domestic demand (+0.1 pp, with stable household consumption, but with a slight rebound in gross fixed capital formatio n. C hanges in inventories made no contribution to GDP growth again in Q2. GDP carry over for 2024 at the end of the 2 nd quarter amounts to 1.0%. Our growth forecast for 2024 of 1.0% thus appears too cautious and French growth could surprise on the upside this year and rise to around 1.2%. This is also good news for public finances, which would benefit from this growth pickup . For the third quarter, French GDP growth would benefit from a positive “ Olympic Games” effect of around +0.2 pp (sales of tickets and audiovisual broadcasting rights are registered in Q3). The July INSEE survey nonetheless pointed to a sharp deterioration in the business climate, to 94 (-5 pp) in all sectors, calling for a certain degree of caution. Moreover, the indicators of political uncertainty also remain high, whereas President E. Macron has announced he will not appoint a prime minister until at least the end of the Olympic Games in mid-August. Lastly, the positive contribution from foreign trade in the 2 nd quarter could be followed by a setback in the coming quarters due to specific factors related to transport equipment.