French Economy Shows Resilience Amid Uncertainties, Growth Expected Through 2028

The French economy is projected to avoid recession through 2028 despite geopolitical uncertainties, according to François Villeroy de Galhau, governor of the Banque de France. Although growth was stagnant at the start of 2026, the macroeconomic outlook remains cautiously positive with a moderate expansion expected over the next several years.

The central bank forecasts inflation to peak at 3.3% in 2026 before dropping below 2%. This forecast considers three scenarios depending on the evolution of the Middle East conflict, a key external risk. The conflict’s impact also weighs on market sentiment, as the Paris stock exchange dropped by 1.09% amid tensions, closing at 8,112.57 points. The CAC 40 index saw a slight weekly decline of 0.03%, with trading volumes suppressed by the May 8 holiday. New clashes in the Gulf have hampered diplomatic efforts between the US and Iran, further fueling uncertainty.

Comparatively, France’s average annual growth over the past 15 years has been 1.1%, below that of the United States. However, private finances of households and businesses remain robust, supporting a gradual increase in potential growth. Villeroy de Galhau emphasized the need for targeted, temporary aid to vulnerable populations facing rising energy prices rather than broad costly subsidies.

On the corporate front, Stellantis announced plans to strengthen its partnership with Chinese automaker Leapmotor, including manufacturing Leapmotor vehicles in Spanish factories and the possibility of shared factory ownership.

Overall, despite moderate growth and external challenges, France’s economy exhibits resilience. The Banque de France expects it to withstand external shocks without entering recession, though careful policy responses will be necessary to manage inflation and energy costs.