Bank of France Downgrades 2025 Growth Forecast Amid Tariff Uncertainties
The Bank of France projects a slowdown in GDP growth to 0.6% for 2025 amid tariff impacts.
Key Points
- • Bank of France revises 2025 growth forecast to 0.6% from 0.7% due to external tariff uncertainties.
- • Inflation expected to decrease to 1% in 2025, down from 2.3% in 2024.
- • Budget deficit projected at 5.4% in 2024, potentially dropping below 5% in 2026.
- • National debt may rise to approximately 120% of GDP by 2027.
The Bank of France has officially revised its growth forecast for the country's economy in 2025, now projecting a slowdown to just 0.6%, down from the previous estimate of 0.7%. This announcement, made on June 12, 2025, highlights the multifaceted challenges facing the French economy, particularly due to external factors such as increased tariffs imposed by the United States.
Olivier Garnier, the director general of the Bank of France, emphasized that this anticipated growth rate is set to mark the lowest recorded rate since 2012, except for the pandemic's peak periods. Despite this downturn, Garnier reassured that France is not sliding into a recession. In contrast to the Bank's forecast, the French government maintains a slightly more optimistic estimate of 0.7% growth for the upcoming year, following a stronger growth of 1.1% in 2024.
The Bank of France's report indicated that the economy is expected to experience minimal growth of 0.1% in both the first and second quarters of 2025. Concurrently, projections for subsequent years have also been adjusted, predicting 1% growth in 2026 and 1.2% in 2027. The downward adjustment in the 2025 forecast has been largely attributed to uncertainties surrounding import tariffs, particularly a 10% hike on various goods, including steel and automobiles, which may further depress growth potential.
On the fiscal front, the Bank anticipates a budget deficit of 5.4% for 2024, consistent with government estimates, with hopes of reducing it to below 5% in 2026. Meanwhile, national debt is projected to climb to around 120% of GDP by 2027. Inflation projections have also seen a noteworthy change, with the Bank forecasting a decrease to 1% in 2025—down from 2.3% in 2024—primarily due to falling energy prices this year.
As the French economy braces for these challenges, the impact of external trade dynamics will play a crucial role in shaping recovery prospects in the years to come.