Real GDP was marginally firmer than expected at the end of 2023. No change versus the previous quarter was a tick stronger than the market consensus and followed a revised flat reading in the July-September period. Accordingly, the economy avoided falling into recession in 2023 but only just in what was still a generally disappointing year. Annual growth was 0.7 percent, up from 0.6 percent.

In fact, quarterly stagnation masked a 0.1 percent hit from final domestic demand as household consumption also dipped 0.1 percent and gross fixed capital formation fell 0.7 percent. Within the latter, business investment was down 0.6 percent and residential investment a further 1.4 percent. Government consumption rose 0.3 percent but inventories subtracted a sizeable 1.1 percentage points.

Consequently, quarterly growth would have been negative but for net foreign trade which added some 1.2 percentage points as a 3.1 percent slump in imports easily more than offset a 0.1 percent drop in exports.

In sum, the fourth quarter GDP data mean that the French economy will begin 2024 lacking any real momentum and with soft domestic demand a clear issue for policymakers. To make matters worse, early business and consumer surveys warn that the current period may not be much better - although that at least should bolster the chances of getting inflation back on track. Still, with the French RPI at 7 and the RPI-P at 8, overall economic activity is actually performing just slightly better than the forecasters predicted.

Fourth-quarter GDP in France is expected to decrease a quarterly 0.1 percent for another quarter of flat results.

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.