France Lowers Growth Forecast for 2026
The Banque de France now projects the French economy will grow by 0.9 percent this year, stepping back from the 1.0 percent estimate it had issued in December 2025.
The bank acknowledged that economic activity proved more resilient than anticipated heading into the close of 2025, with that positive momentum extending through the first quarter of 2026. Yet conditions have since deteriorated — elevated energy costs and a sharply worsening geopolitical landscape have conspired to dim the near-term outlook since March.
Under a baseline scenario that assumes a relatively rapid resolution of the Middle East conflict, the Banque de France forecasts growth will moderate further to 0.8 percent in 2027, before staging a recovery to 1.2 percent in 2028, driven primarily by a rebound in exports and a pickup in private domestic demand.
Over the broader projection horizon, household consumption is expected to remain the principal engine of domestic demand, anchored by accelerating wages, strengthening purchasing power, and a gradual revival in business investment.
On the inflation front, the central bank projects price growth will climb from an annual average of 0.9 percent in 2025 to 1.7 percent in 2026, with elevated energy costs bearing the bulk of the responsibility for the acceleration. A partial reprieve is anticipated in 2027, when inflation is forecast to ease back to 1.4 percent as energy markets find firmer footing.
The revised projections arrive amid a period of acute global uncertainty. The outlook has been significantly clouded since the United States and Israel launched major coordinated strikes against Iran on Feb. 28, a move that sent oil prices sharply higher and sent ripples of instability through the global economy.
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