The French central bank has downgraded its growth forecast for the country’s economy, saying it will not recover until 2025.
The bank said in its quarterly report that France’s GDP is on track to grow by 0.8% this year, down from its previous estimate of 0.9%.
The report said consumer spending is expected to recover in 2024 as inflation slows and household purchasing power rises. This would boost GDP growth to 1.3% in 2025 and then 1.6% in 2026.
The central bank’s outlook is less optimistic than the government’s. The government’s budget for the new fiscal year is based on growth of 1% this year and 1.4% in 2024.
The bank expects inflation to fall from an average of 5.7% this year to 2.5% next year, and then below the European Central Bank’s target of 2% by the first quarter of 2025.
The bank’s downgrade comes as the French economy faces a number of headwinds, including the war in Ukraine, rising inflation, and supply chain disruptions.
The war in Ukraine has caused energy prices to soar, which is putting a strain on household budgets. Inflation is also rising, which is making it more expensive for businesses to operate. And supply chain disruptions are making it difficult for businesses to get the goods and services they need.
The central bank’s downgrade is likely to add to concerns about the French economy. The government is already under pressure to take action to boost growth.
