The French economy expanded 0.1 percent in the first quarter, matching the flash figure, and grew 0.6 percent from the year-ago quarter. Consumers remained wary as consumption fell 0.2 percent from the fourth quarter, the first contraction since a comparable decline in the second quarter of 2023.
Exports fell sharply, down 1.8 percent quarter-on-quarter, on the back of declines in chemicals and transportation equipment. Imports increased 0.5 percent mainly on energy. As a result, net trade was a drag on growth, subtracting 0.8 percent.

At the same time, inventory changes contributed 1.0 percent to quarterly growth, but this should be read in the context of the tariff situation. Excluding inventory changes, domestic demand subtracted 0.1 percent from growth.
Households boosted savings rose to 18.8 percent of gross-disposable income (GDI) in the first quarter, from 18.5 percent in the final quarter of last year. This was boosted by a 0.1 percent bump in GDP in the first quarter, matching the increase in the previous quarter.

The economy remains in a fragile state, and with the tariff environment it will be a challenging second quarter. At this point, the inventory contribution is not necessarily a positive development and could foreshadow economic contraction.

Forecasters see no revision in Q1 GDP from 0.1 percent on quarter and 0.8 percent on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Following the release of the flash estimate about four weeks earlier, the second report incorporates additional data to provide a more accurate reading. This is also revised in the final report, published in the third month after the reference quarter.

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 anemic 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.