The French economy is showing signs of gradual recovery in the second quarter, with data indicating that domestic demand will be boosted by factors such as falling inflation, a tight labor market, rising consumer confidence, and lower interest rates. However, there are risks associated with this forecast that could impact the pace of recovery.
Despite these challenges, it is predicted that GDP growth could reach 0.2% quarter-on-quarter in the second quarter and continue to accelerate in the second half of the year. However, there are risks associated with this forecast that could impact the pace of recovery.
Looking ahead to 2025, GDP growth of 1.3% is expected, suggesting a more optimistic outlook for the future. Despite this improvement throughout the year, the overall average GDP growth for 2024 is anticipated to be weak due to the slow start to the year. It is estimated to be around 0.5%, compared to 0.9% in 2023. This falls short of the French government’s forecast of 1% for 2024 as a whole, leading to a potential increase in the public deficit.
As a result, fiscal policy may become more restrictive in the coming months, which could potentially hinder the economic recovery and put additional pressure on France’s already strained budget situation.
