The economy was again very sluggish at the start of the year. Quarterly growth was just 0.2 percent, a couple of ticks above the downwardly revised fourth quarter rate and 0.1 percentage point above the market consensus but still reflecting weak domestic demand. Positive base effects saw annual growth double to 0.8 percent but total output was still only 1.3 percent above its pre-pandemic level at the end of 2019.

The modest quarterly gain masked a contraction in final domestic demand which subtracted 0.1 percentage point from overall economic growth following a 0.4 percent hit in the previous period. Household spending was only flat having already fallen 1.0 percent in the fourth quarter and gross fixed capital formation dipped 0.2 percent. Within the latter, business investment edged up 0.1 percent but housing investment (minus 1.4 percent after minus 1.6 percent) declined for a fourth straight quarter. General government consumption also dropped 0.1 percent while business inventories reduced growth by a further 0.3 percentage points.

Consequently, the economy would have contracted but for the external sector where net foreign trade added 0.6 percentage points as exports rose 1.1 percent and imports declined 0.6 percent.

In sum, the economy continues to struggle in the face of high inflation, rising borrowing costs and ongoing strike activity and rioting caused by pension reform. Looking ahead, business surveys were mixed in April but consumer confidence remains unambiguously low. Second quarter GDP is unlikely to impress. Even so, for now, with the French ECDI at 7 and the ECDI-P at exactly zero, overall economic activity is performing much as markets expected.

First-quarter GDP in France is expected to post a marginal 0.1 quarterly percent rise.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The flash estimate, released a relatively short 4-5 weeks after the end of the reference quarter, is an effort to speed up delivery of key economic data. In contrast to most European flash releases, the French version provides an early look at the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.