The downward revision of growth forecasts indicates a cautious outlook for the French economy, influenced by both domestic political instability and global economic uncertainties.
The projected peak in unemployment suggests that the labor market is experiencing significant strain, which could have long-term implications for economic recovery and social stability in France.
The anticipated decline in inflation rates may provide some relief to consumers and businesses, but the overall economic environment remains fragile.
If the current trends continue, France may face prolonged economic challenges, particularly if political instability persists and trade tensions escalate globally.
The labor market may not recover fully until 2027, indicating a slow rebound in employment opportunities and economic activity.
The effectiveness of the government's fiscal policies will be crucial in determining whether the economy can achieve the projected growth rates in the coming years.
The Banque de France has revised its GDP growth forecast for 2025 down to 0.9%, a decrease of 0.3 points from previous estimates. This adjustment reflects a backdrop of 'double uncertainty' both nationally and internationally, according to Olivier Garnier, the director general of statistics, studies, and international affairs at the institution.
For 2024, the growth projection remains unchanged at 1.1%, attributed to a zero growth forecast for the fourth quarter, despite a slight increase in the third quarter due to the Olympic Games. The forecasts for 2026 and 2027 have also been lowered to 1.3%.
The public deficit is now expected to be between 5% and 5.5% of GDP in 2025, a revision from earlier expectations of a reduction to 5%. This change is influenced by uncertainties surrounding the political landscape and international trade risks.
The unemployment rate is projected to peak at 7.8% in 2025 and 2026, slightly up from the earlier estimate of 7.6%. It is expected to decline to 7.4% by 2027, still far from the full employment target of around 5%.
Inflation is projected to average 2.4% in 2024, followed by 1.6% in 2025, 1.7% in 2026, and 1.9% in 2027, indicating a potential return to stability after a peak of 7% in early 2023.
