Economic Outline

Economic Indicators

France is ranked as the world’s seventh-largest economic power (IMF, 2024). In 2024, France's GDP grew by 1.1%, matching 2023's rate. Household investment dropped 6% due to high interest rates and low confidence, following an 8.2% decline in 2023. Business investment fell 1.6% amid low capacity utilization and weak demand. Growth was driven by public consumption (+2.1%) and public investment (+3.3%). In 2025, a contractionary fiscal stance is expected to limit real GDP growth to 0.8% (IMF). Private investment will remain weak due to the delayed impact of accommodative monetary policy and ongoing economic uncertainty. Private consumption will benefit from disinflation and rising real wages. In 2026, economic activity is projected to pick up, with GDP growth reaching 1.1%, supported by lower fiscal adjustments and falling credit costs. Growth will be driven by private domestic demand, as the saving rate declines and private investment benefits from monetary easing.

Concerning public finances, the fiscal deficit was estimated at 6.1% of GDP in 2024, up from 5.5% in 2023. Announced fiscal consolidation measures for 2025 amount to 1.4% of GDP, but projections assume a lower effort, with a structural adjustment of the primary balance of 1% of GDP in 2025 and 0.5% in 2026 (data OECD). In 2026, the general government deficit is projected to reach 5.5% of GDP, as some revenue measures from 2025 are set to expire. The revenue-to-GDP ratio is expected to decline by about ¼ pps, while the expenditure ratio will decrease only slightly. Interest payments are forecast to rise by 0.3 pps. After falling to 109.9% of GDP in 2023, public debt was estimated to rise to 112.3% in 2024. It is expected to continue increasing gradually, reaching 117.6% in 2026 (IMF). This rise is primarily driven by high primary deficits and growing interest payments, while the debt-reducing effect from nominal growth is anticipated to be more moderate than in previous years. Inflation gradually decreased in 2024, reaching 1.5% in October, primarily driven by lower energy and food prices, along with a slowdown in services prices. A slight increase is expected in 2025 due to base effects and rising food prices. Energy price growth is forecast to further moderate (+0.8%) in 2025, with electricity prices declining. Average inflation for 2024 is expected to be 2.4%, easing to 1.9% in 2025 and 1.8% in 2026, remaining below the ECB target.

The labour market remained strong in Q1 2024 but slowed in Q2. The unemployment rate fell by 0.2 percentage points to 7.3% in Q2 2024, close to its lowest since 2008, while the employment rate reached a record high of 74.7%. According to data from INSEE, in Q4 2024, the number of unemployed people fell by 63,000 from the previous quarter, reaching 2.3 million, resulting in an unemployment rate of 7.3% for the year. Employment growth is expected to slow in 2025 and 2026 (+0.1% and +0.4%, respectively, after +0.5% in 2024) as the impact of apprenticeship contracts diminishes, hours worked return to 2019 levels, and labour productivity recovers. The unemployment rate is projected to gradually rise to 7.5% in 2025 and 7.6% in 2026 (EU Commission). On average, French citizens enjoy a high GDP per capita (PPP), estimated at USD 67,658 in 2024 by the IMF. Nevertheless, inequalities persist and according to Eurostat one-fifth of the population was at risk of poverty or social exclusion at the end of 2023 (just below the EU average).

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