IMF Downgrades France's 2026 Growth Forecast, Complicating Government Budget Plans

The International Monetary Fund (IMF) has adjusted its economic growth projections for France, signaling a slower recovery than previously anticipated for 2026. The IMF has downgraded its GDP growth forecast for 2026 by 0.1 percentage points to 0.9%, marking the second such revision since April. This contrasts with the government's more optimistic projection of 1% growth for 2026, as maintained by the French Ministry of Economy (Bercy) in its detailed budget presentation.

For 2025, the IMF slightly raised its growth forecast to 0.7%, up from 0.6%, indicating moderate near-term optimism. However, the downward revision for 2026 presents financial challenges for the French government, which is already contending with difficulties in implementing budgetary savings measures. The reduced growth outlook adds complexity to the government's budgetary equation amidst ongoing economic uncertainties.

Broader Eurozone forecasts also reflect mixed signals. The IMF raised its 2025 growth estimate for the Eurozone to 1.2%, an increase from 1%, driven in part by fiscal stimulus in Germany and resilient growth in Spain, which saw its forecast increased to 2.9%. Nevertheless, the IMF cautioned that the Eurozone's 2026 growth outlook has softened, with projections lowered from 1.2% to 1.1%. France’s downgraded forecast aligns with this trend of more cautious expectations.

IMF Chief Economist Pierre-Olivier Gourinchas acknowledged the persistent economic risks, including high uncertainty and potential trade tensions. Despite these challenges, the IMF recognizes opportunities for future growth through improved international cooperation and productivity gains from technological advancements like artificial intelligence.

These revised forecasts underscore the economic headwinds facing France and the Eurozone, highlighting the challenges policymakers face in steering recovery efforts in an increasingly complex global economic environment.