The Bank of France lowers its economic growth forecast for 2025

Europe's second-largest economy is expected to face a slowdown in GDP growth this year. Last year's growth figure was 1.1%, but the Bank of France now forecasts a modest expansion of 0.7% for 2025. This is a downward revision from the financial regulator's earlier projection of 0.9%.

In its quarterly report, the Central Bank of France attributed the slowdown to trade tensions caused by U.S. President Donald Trump's tariffs. These tensions have reduced demand for French exports, although France is less exposed to the U.S. market compared to other countries.

Meanwhile, the financial regulator expects inflation to ease to 1.3% in 2025, down from the 1.6% rate anticipated at the end of 2024. This change is largely due to lower prices for services and slower wage growth in the country.

According to Reuters, inflation in France is projected to rise to 1.6% in 2026 and reach 1.9% in 2027. This period will be characterized by accelerated inflation growth, accompanied by rising wages and a corresponding increase in consumers' purchasing power.

Additionally, the Central Bank of France expects the country's economy to grow by approximately 0.2% in the first quarter of 2025, as reported by Reuters.