Banque de France Lowers Economic Growth and Inflation Forecasts Through 2027
Banque de France revises economic growth and inflation forecasts for 2025-2027, highlighting lower growth rates and a slight decrease in unemployment.
Key Points
- • Growth forecast lowered to 0.6% in 2025, 1% in 2026, and 1.2% in 2027.
- • Inflation expected at 1% in 2025, 1.4% in 2026, and 1.8% in 2027.
- • Unemployment rate revised down to 7.6% in 2025 and 7.7% in 2026.
- • Public debt projected to reach 120% of GDP by 2027.
The Banque de France has announced significant revisions to its economic forecasts, predicting lower growth and inflation rates for the country through 2027, reflecting ongoing uncertainties both domestically and internationally. The new projections, released on June 11, indicate a growth rate of only 0.6% in 2025, 1% in 2026, and 1.2% in 2027, down by 0.1, 0.2, and 0.1 percentage points respectively from earlier forecasts made in March 2025.
Inflation is also projected to be lower, with expected figures of 1% in 2025, 1.4% in 2026, and 1.8% in 2027, marking a decline of 0.3, 0.2, and 0.1 points compared to previous estimates. Despite the downward adjustments in growth expectations, the unemployment rate has been revised downwards as well, anticipated to be at 7.6% for 2025 and 7.7% for 2026 due to a projected reduced recovery in workforce productivity.
Household consumption is expected to be the main driver of economic growth, marked by a 2.5% increase in purchasing power in 2024, although household and business investments are projected to see a decline of 0.5% in 2025 before rebounding in subsequent years. Additionally, foreign trade is expected to weigh on growth in 2025, while remaining neutral thereafter.
In terms of public finances, the forecasted public deficit is 5.4% of GDP for this year, and public debt is projected to reach 120% of GDP by 2027. The Banque de France has highlighted concerns over U.S. tariffs impacting the French economy, estimating a negative effect of up to 0.4 percentage points of GDP by 2027. This environment of economic uncertainty continues to pose significant challenges to these revised outlooks.