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    France’s final Q2 GDP stays at +0.3%, with positive contributions from consumption and inventory changes

    by VT Markets
    /
    Aug 29, 2025
    In the second quarter, France’s GDP grew by 0.3%, in line with early forecasts. This update from INSEE shows an increase from the previous quarter’s growth of 0.1%. The breakdown shows that consumption added 0.10% to GDP growth, while changes in inventory contributed a larger 0.52% to the economy.

    Economic Performance Analysis

    On the downside, net foreign trade decreased GDP growth by 0.27%. This analysis highlights the different factors affecting France’s economy during this quarter. The final GDP figure matches the initial reading, so there are no immediate shocks for the market. Yet, a closer look reveals some weakness in the second quarter’s growth. The economy’s reliance on inventory build-up raises concerns for the upcoming months. Weak consumer spending fits into the context of high-interest rates squeezing household finances. The European Central Bank’s recent statements on August 21, 2025, confirmed a strict ‘data-dependent’ approach, indicating that policies will stay tight. This means a quick rebound in consumer spending is unlikely. The sluggish situation for French consumers is part of a wider trend in the Eurozone. Eurostat’s retail sales data for July 2025 showed a 0.5% drop from the previous month, marking three months of declines. This suggests that the economy’s main supporting pillar is weakening.

    Positioning for Potential Downside

    Growth based on inventory increases is often short-lived and can quickly reverse. We have seen this happen before, especially during the inventory cycles of 2022-2023, where initial accumulation led to a sudden drop that hurt manufacturing. A similar slowdown in Q3 or Q4 of 2025 seems increasingly likely. Given this scenario, we should consider strategies to prepare for potential declines in European stocks. Buying put options on the CAC 40 index could be a smart way to hedge against potential market drops. This approach helps protect against risks from an economic slowdown caused by unwinding inventory and weak demand. Create your live VT Markets account and start trading now.

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