French central bank lowers economic growth forecast

(CPV) - On December 16, the Bank of France lowered its economic growth forecast for the country in 2025 from 1.2% in the previous forecast to 0.9%.

The Bank of France has lowered its economic growth forecast for the country in 2025 to 0.9%. (Photo: Reuters)

"The new forecasts come amid growing uncertainty in the domestic and international economic situation," said Olivier Garnier, a senior official at the Bank of France.

The bank also lowered its economic growth forecast for 2026 and 2027 to 1.3%. For 2024, the bank kept its growth forecast at 1.1%.

The Bank of France's revised forecast comes just two days after Moody's downgraded the country's credit rating from Aa2 to Aa3, citing concerns that the political situation could significantly weaken public finances. Moody's said France's public finances would be significantly weakened by the split between the three power blocs of the left, the centre and the far right. This could limit the scope and scale of future measures that could help narrow the current large deficit. However, the rating agency maintained France's outlook at stable.

The central bank stressed that the government 's fiscal consolidation efforts and the current political uncertainty are expected to dampen consumer spending and private sector investment. A series of political crises throughout the year have led to heightened caution among consumers and businesses.

Political disruption continued on December 14 when President Emmanuel Macron appointed a new prime minister - his fourth this year, after opposition lawmakers ousted the previous government over a disagreement over the 2025 budget bill.

Central Bank Governor Francois Villeroy de Galhau, in a speech to Le Figaro newspaper, warned that if budget problems are not resolved, France could fall behind its European partners economically.

Meanwhile, the Bank of France also forecasts that inflation will remain below the European Central Bank's (ECB) target of 2% over the next three years, with the rate expected to fall to 1.6% in 2025 and then gradually increase to 1.7% in 2026 and 1.9% in 2027. Without stricter fiscal measures, France's debt is expected to continue to rise, reaching 117% of GDP in 2027.

The French government is expected to raise taxes and cut spending by tens of billions of dollars to "significantly" reduce the public deficit. The country's central bank expects the deficit to fluctuate between 5 and 5.5 percent of GDP next year./.

Source: https://dangcongsan.vn/the-gioi/tin-tuc/ngan-hang-trung-uong-phap-ha-du-bao-tang-truong-kinh-te-686893.html