Moody's Downgrades France's Credit Rating

Forex - International credit rating agency Moody's has downgraded France's credit rating due to the deterioration of public finances.

According to Moody's statement, the country's long-term issuer ratings in local and foreign currencies, as well as senior unsecured bond ratings in local currency, have been lowered from "Aa2" to "Aa3." The outlook for the credit rating has been revised from "negative" to "stable" following the downgrade.

The statement noted, "The decision to downgrade France's rating reflects our view that the country's public finances will significantly weaken due to political fragmentation, which will limit the scope and magnitude of measures that could reduce large deficits in the foreseeable future."

Moody's expects that France's public finances will be significantly weaker compared to its baseline scenarios over the next three years. The deficit is projected to remain at 6.3% of GDP in 2025 and gradually decrease to about 5.2% of GDP by 2027. Consequently, under this scenario, the debt-to-GDP ratio is expected to rise from 113.3% in 2024 to around 120% by 2027.

Moody's anticipates that France's GDP growth will reach 1.1% this year, 1.0% in 2025, and 1.4% in both 2026 and 2027.