France: « Olympic » growth in Q3

French GDP growth increased by +0. 4 % (+0.36%) quarter-on-quarter in the 3rd quarter according to the Insee flash estimate, in line with our expectations and slightly above the Bloomberg consensus (+0.3%), after +0.2% in Q2 and Q1 2024 , with Q1 marginally revised down . GDP growth was boosted by some “Olympic” effects , as sales of tickets and audiovisual broadcasting rights were registered in Q3. Insee did not provide a precise estimate of the “Olympic” effects , but our estimate of +0.25 pp temporary boost still sound s reasonable, with a similar backlash expected in Q4 . Private consumption grew by +0.5% Q/Q in Q3 after 0.0% in Q2, boosted by the consumption of recreational services in connection with the Paris Olympic and Paralympic Games. Domestic demand contributed positively to GDP in Q3 (+0.2 pp after +0.1 pp) with strong private consumption and despite a sharp drop in gross fixed capital formation (-0.8% Q/Q after -0.1%), with a sharp decline in non-financial company investments (-1.4% Q/Q after -0.2% , fourth quarter of decline in a row ) and a further decline in household investment (-0.9% Q/Q after -1.0%, thirteenth consecutive quarter of decline) . Insee highlighted a plunge in i nvestment in manufactured goods , especially for transport equipment (-9.2% Q/Q after -0.6%), linked to the start of the new European “GSR2” (General safety regulation) standard for heavy and light vehicles at the beginning of July . Public consumption increased by +0.5% Q/Q as in Q2. The contribution of foreign trade to growth remained slightly positive in the third quarter (+0.1 p p after +0.2 p p , fourth consecutive quarter of positive contribution ), with imports declining more sharply (-0.7% Q/Q after +0.1%) than exports (-0.5% Q/Q after +0.5%). Imports in t ransport equipment were down again (-1.7% Q/Q after -2.1%), while exports disappointed in manufactured goods (-1.7% Q/Q after +0.8%) and agricultural products (-11.6% Q/Q after -6.5%), reflecting this year's poor harvests. Changes in inventories made a small positive contribution to GDP growth in Q 3 (+0.1 pp after 0.0 pp). We revised our 2024 GDP forecast to 1.1%. GDP carry over for 2024 at the end of the 3rd quarter amounts to 1.1 %. Our previous growth forecast for 2024 of 1.2% thus appears a bit too optimistic given disappointing economic surveys in October pointing to a sluggish underlying growth in Q4 and the expected backlash effect from the Olympics. All in all, GDP is expected to shrink by around -0. 1 % /-0.2% in Q4.