French economy reports zero growth as recession fears loom across Europe

French economy has ground to a halt in the second quarter of the year reporting zero growth. This is according to the statistics bureau INSEE which released its latest report on Friday.

According to the latest figures released by INSEE, there has been no growth in the French economy in the second quarter of 2016. THOMAS SAMSON/AFP

The hope of an economic recovery because of the encouraging first quarter results, has given away to disappointment following the release of the latest figures.

Economist Jean Joseph Boillot said that though earlier there was some expectation of recovery, it hasn’t been the case due to lack of investment and consumption.

The figures show that consumer spending stagnated while investment in both the public and the private sector dropped. Oil refinery strikes in May and June weighed on overall production, which dropped 0.2 percent, and the construction sector also weakened.

Despite these gloomy figures, the ministry of finance said that it stood by its own growth forecast of 1.5 percent for the full year 2016.

According to Boillot, the government has been saying that things are get better. “However, nothing is on the right track as far as unemployment figures are concerned. There has been no new investment. And you have to take into account the agriculture sector as well. The yield of wheat dropped by half because of bad climatic conditions last summer. All this adds to the economic depression,” he told RFI.

He added that the looming recession will hit not only France but the whole of Europe. “There has been a negative impact of Brexit. We have this situation in France. You have heard of the bad banking situation in Italy and Spain hasn’t clearly recovered,” he said.

The latest official numbers for Europe show that growth in the eurozone halved in the second quarter.

The Eurostat statistics agency said economic growth in the 19-nation single currency bloc slowed to 0.3 percent in the April to June period, with stagnation in France largely contributing to the poor data.

This was down from a far more robust expansion of 0.6 percent in the previous quarter, though analysts had said that result was due to a warm winter in Europe.