France Q1 GDP growth came at +0.3% q/q, as industrial production recovered. However, demand did not follow suit and inventories contributed +0.3pp to q/q growth. Domestic consumption grew by +0.4% q/q, showing no particular catch-up from the stagnation observed in Q4 and despite the implementation of a fiscal package that will add EUR10bn to household disposable income in 2019. The household saving ratio is likely to have increased further from the 15.3% observed in Q4 2018 (+1pp from Q3). Moreover, excluding energy, household consumption in goods remained stagnant and residential investment decreased by -0.3% in Q1. This had an impact on several sectors, driving a further increase in insolvencies in Q1: the 12-months sum was up by +1.7% from a year ago. Moreover, road transport (+12.9%), housing (+12.8%), agrifood (+10%), food retail (+7.7%) and catering (+7%) experienced sharp rises of insolvencies. Along with the deterioration of the credit cycle, higher inventories should continue to drive a subdued growth of +1.2% in 2019.
