GDP is estimated to have grown by 0.9% in 2023, driven by strong growth in the second quarter. This is marginally below the Autumn 2023 Forecast. High inflation and tighter financial conditions weighed on growth throughout the year despite government support measures and a very favourable labour market, accompanied by dynamic wages that preserved households’ purchasing power. While net exports contributed positively to growth, these were fuelled mostly by a decrease in imports of goods, as the growth of domestic demand was limited.
In 2024, GDP is expected to grow moderately, by 0.9% annually, a downward revision of 0.3 pps. compared to the Autumn Forecast. The revision can be mainly attributed to a lower carry-over from a weaker than expected second half of 2023. Economic activity is expected to gather momentum in the second half of 2024. Private consumption is set to drive GDP growth on the back of rapidly declining inflation. Investment is expected to remain subdued until the second half of the year due to still restrictive financing conditions but is then set to start recovering. Net exports are projected to make no contribution to GDP growth given that imports are set to rise - pushed by strong demand - while exports of goods are only expected to progressively catch up with their pre-crisis level.
In 2025, GDP growth is forecast at 1.3%, marginally below the Autumn Forecast. Economic activity is expected to be further driven by private consumption as inflationary pressures dissipate, and households’ saving rate declines gradually towards its historical average. Investment from both households and corporations is projected to recover progressively. Net exports are set to have a limited contribution to growth, with strong exports growth offset by rising imports as domestic demand expands.
After peaking at 7.0% in the first quarter of 2023, HICP inflation decreased throughout the year to reach 4.2% in the fourth quarter, largely thanks to declining energy and commodity prices. The progressive phasing-out of energy-related measures and the increase of the electricity tax in February 2024, to roughly two-thirds of its pre-crisis level, will lead to an increase in electricity prices of close to 10%. Meanwhile, wage increases are still set to feed underlying price pressures. However, the downward trend in inflation is set to continue over the forecast horizon. After 5.7% in 2023, inflation is expected to reach 2.8% in 2024 and 2.0% in 2025. For 2024, this is slightly lower than in autumn, while the forecast for 2025 remained unchanged.
FAQs
The European Commission on Feb. 15 cut its 2024 GDP growth forecast for France to 0.9% from the 1.2% seen in November, and it cut its forecast for Germany to 0.3% from 0.8%.
What is the economic forecast for France in 2024? ›
According to our March interim projections, GDP growth is expected to remain sluggish in 2024, to stand at 0.8% (after 0.9% in 2023), before accelerating to 1.5% and 1.7% in 2025 and 2026, respectively.
What is the future of the French economy? ›
In 2024, GDP is expected to grow moderately, by 0.9% annually, a downward revision of 0.3 pps. compared to the Autumn Forecast. The revision can be mainly attributed to a lower carry-over from a weaker than expected second half of 2023. Economic activity is expected to gather momentum in the second half of 2024.
What are the most serious economic problems facing France? ›
The extraordinary debt levels across the major economies in the world pose a risk to France, too, as it faces the threat of an austerity budget which directly impacts the financial health of households and consumers. The shortage of labour is one of the most common challenges of the economic sector in France.
Is France in growth or decline? ›
French GDP growth slowed down significantly in 2023, with an annual average of +0.8% according to our estimates, following on from 2.5% in 2022.
Is France's economy growing or Shrinking? ›
France is dropping its GDP growth forecast for this year from 1.4% to 1% and will slash spending by about €10 billion, the country's finance minister has said.
Is France economically stable? ›
Economic Survey of France (November 2021)
The French economy rebounded quickly following the coronavirus crisis, in particular thanks to the acceleration of the vaccination campaign and strong public support measures.
Which is the fastest growing economy in the world 2024? ›
By far the largest economy to make the IMF's high growth projection list is India, the world's most populous country. Other Asian countries with strong growth prospects in 2024 include Mongolia (6.5%), Tajikistan (6.5%) and the Philippines (6.2%).
Which is the fastest growing economy in 2024? ›
IMF Projections: The Fastest Growing Economies in 2024
| Country | Region | GDP Growth 2024 (%) |
|---|
| 🇲🇴 Macao SAR | Asia Pacific | 27.2 |
| 🇬🇾 Guyana | Americas | 26.6 |
| 🇵🇼 Palau | Asia Pacific | 12.4 |
| 🇳🇪 Niger | Sub-Saharan Africa | 11.1 |
17 more rowsOct 24, 2023
France is entering an era of belt-tightening, as the wars in Ukraine and Gaza, economic slowdowns in Germany and China and record-high interest rates take a bigger-than-expected toll on growth.
As expected, French GDP stagnated in the fourth quarter of 2023 (0% quarter-on-quarter), following stagnation in the third quarter (figures revised upwards from -0.1 to 0%). France therefore narrowly avoids a technical recession, but the details are weak. Over 2023, GDP growth was 0.9%, compared with 2.5% in 2022.
Is France entering recession? ›
(Bloomberg) -- The euro zone unexpectedly avoided a first recession since the pandemic in the latter half of 2023 as firmer growth in Italy and Spain offset the malaise in Germany.
Is poverty bad in France? ›
Poverty in France reached its highest rate in 2018. That year, almost 15 percent of the French population was living below the poverty line, which means that their income was less than 60 percent of the median income in the country.
What is a major issue in France? ›
France 2022. Racial and religious discrimination persisted, especially targeting Muslim individuals and associations. Excessive use of force by police continued without accountability.
What are France's weaknesses? ›
Weaknesses
- Insufficient number of exporting companies, loss of competitiveness and market shares. ...
- Advanced de-industrialisation, relatively low level of product range, insufficient innovation efforts.
- Low employment rate for young people and senior citizens.
- Relatively inefficient public spending and high tax burden.
As expected, French GDP stagnated in the fourth quarter of 2023 (0% quarter-on-quarter), following stagnation in the third quarter (figures revised upwards from -0.1 to 0%). France therefore narrowly avoids a technical recession, but the details are weak. Over 2023, GDP growth was 0.9%, compared with 2.5% in 2022.
Is France going through inflation? ›
Inflation Rate in France is expected to be 2.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the France Inflation Rate is projected to trend around 1.90 percent in 2025 and 1.70 percent in 2026, according to our econometric models.
Is France a planned or market economy? ›
The government system is a republic; the chief of state is the president, and the head of government is the prime minister. France has a mixed economic system which includes a variety of private freedom, combined with centralized economic planning and government regulation.
Why is France's unemployment rate so high? ›
It is shown that the main reason for high unemployment in France is a slow down in the demand for labouridue to high labour and energy costs in the early 1980s and to tight aggregate demand over the whole period. Changes in the labour supply have had an increasing impact in recent years.
