French economy grew 0.3% in Q2, beating forecasts

By Sudip Kar-Gupta

PARIS (Reuters) -The French economy grew 0.3% in the second quarter, beating forecasts, as a rebound in household spending boosted the euro zone's second-biggest economy, according to official data published on Wednesday.

Analysts polled by Reuters had forecast 0.1% growth for the preliminary Q2 GDP. The growth of 0.3% also showed an improvement from France's Q1 GDP growth of 0.1%.

France is facing relatively sluggish economic growth and pressures from its high deficit.

Prime Minister Francois Bayrou wants to reduce the budget deficit from 5.4% of GDP this year to 4.6% in 2026, ultimately targeting the EU's 3% fiscal deficit limit by 2029.

Finance Minister Eric Lombard told RTL Radio that the preliminary Q2 GDP growth figures were nevertheless "good news".

He added they also showed that the French economy was faring relatively well given the pressures from the framework trade tariffs deal between the European Union and the United States.

"This 0.3 percent shows we are resisting relatively well, given the situation," said Lombard.

However, Leverage Shares' senior researcher Sandeep Rao said the fact that the trade deal envisages more EU spending on U.S. military hardware would put pressure on France's plans to curb its own government expenditure.

"We expect investors will maintain a relatively neutral outlook on French equities while French OAT government bonds can be expected to remain under pressure going forward," Rao added.

(Reporting by Sudip Kar-Gupta; Editing by Michael Perry and Andrew Heavens)

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