The economy unexpectedly expanded in the first quarter, albeit by a marginal 0.1 percent, helped by the production of goods and services which increased 0.2 percent in the first quarter.

Inventory changes contributed 0.5 percent in the quarter. It's unclear whether this is due to stocking ahead of an anticipated upturn, or because of an economic slowdown. Excluding inventories, domestic demand was unchanged on the month, suggesting the former is the more likely scenario.

Although imports increased 0.4 percent in the first quarter, exports fell 0.7 percent after rising 0.2 percent in the fourth quarter. As a result, net foreign trade contributed minus 0.4 percent.

Consumer spending was unchanged in the first quarter, slowing from 0.2 percent in the fourth quarter.

Compared to the first quarter of 2024, the French economy expanded 0.8 percent.

Although the economy eked out a modest expansion in the first quarter, rising inventories, a cautious consumer, and declining exports point to a subdued economy.

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.