French Central Bank Cuts 2025 Growth Forecast to 0.9%

Forex - The Bank of France has revised its growth forecast for 2025 downward due to "increasing uncertainties" in both domestic and international economic outlooks. According to the statement from the Bank of France, the growth forecast for 2025 has been adjusted from 1.2% to 0.9%.

This revision follows the downgrade of France's credit rating by the international credit rating agency Moody's last Friday. Moody's lowered the rating to "Aa3" following months of political crisis and budget deadlock in the country.

The bank also lowered its 2026 forecast by 0.2 percentage points, setting it at 1.3%. The forecast for 2027 remains at the same level. The Bank of France maintained its forecast for 2024 at 1.1%, based on zero growth in the fourth quarter, similar to 2023.

Olivier Garnier, Director General for Statistics, Studies, and International Relations at the Bank of France, stated that the new macroeconomic forecasts were made "in the context of increasing national and international uncertainties."

The Central Bank expects the public deficit to be between 5.0% and 5.5% of GDP next year. The bank predicts that inflation for the eurozone will be 2.4% this year, followed by 1.6% in 2025, 1.7% in 2026, and 1.9% in 2027.

It is expected that the unemployment rate in France will peak in 2025 and 2026 but remain below 8%, and "will decrease again following the recovery in activities."