France Economic Outlook 2025
Executive Summary
France is the second-largest economy in the Eurozone. It faces a tricky economic path ahead. The France economic outlook for 2025 predicts both challenges and strengths. As of March 1, 2025, GDP growth is set at 1.1% for 2024. It will dip to 0.9% in 2025 due to budget cuts. A rebound to 1.3% is expected in 2026, according to Banque de France estimates. Inflation will fall from 2.5% in 2024 to below 2% in 2025, helped by lower interest rates. Unemployment holds steady at 7.3%.
Yet, money troubles linger. The deficit hits 6.2% of GDP in 2024. Debt climbs from 112.7% to 117% by 2026. Political chaos after a late-2024 no-confidence vote makes things worse. Risks from U.S. trade and a slow European economy add pressure. France needs big changes to avoid a debt crisis.
France Economic Outlook
A Global Economic Player
France, the world’s 7th largest economy, recorded a GDP of $3.28 trillion in 2024, accounting for 2.87% of global output.
Over the past decade (2014–2023), France’s GDP growth averaged 1.2% annually. The COVID-19 pandemic triggered a 6% GDP decline in 2020—steeper than the EU (-5.5%), USA (-3.4%), and China (+2.3%)—followed by a strong 2021 recovery fueled by stimulus and service sector growth.
France has a diversified economy, dominated by service sector with around 70% of its GDP. Second main pillar is manufacturing with around 10% of its GDP. With 31 companies that are part of the world’s biggest 500 companies, France was in 2020 the most represented European country in the 2020 Fortune Global 500, ahead of Germany (27 companies) and the UK (22).
As of 2024, France’s GDP per capita is approximately $47,954, reflecting its status as a high-income economy despite ongoing fiscal and growth challenges (based on a $3.28 trillion GDP and a population of around 68.4 million).
Unemployment and Inflation Trends
France’s projected 7.4% unemployment rate in 2025 is well above the EU average (6.0%–6.1%). This gap highlights France’s structural labor market rigidities and fiscal burdens.
Prior to 2021, France’s core inflation consistently hovered around 1%, but the aftermath of the COVID-19 pandemic, compounded by global supply shocks and wage pressures, drove it to a peak of 6% in 2023.
However, with measures implemented by the government and the EU, inflation began to decrease to more manageable levels. The European Central Bank subsequently started to lower interest rates as inflation declined, to support growth and employment.
External Debt
External debt is the money borrowed from foreign countries which includes banks, governments and financial institutions.
According to World Bank Policy Research Working Paper 10475 report on June 2023, global external debt as a share of GDP reached 114% in 2020.
France’s external debt reached approximately €7.16 trillion in Q2 2024, representing about 245% of its nominal GDP, according to Banque de France data. That reflects a significant reliance on foreign financing, amplifying vulnerability to global interest rate shifts and geopolitical uncertainties despite its robust economic standing.
Manufacturing PMI
PMI(Purchasing Managers’ Index) is one of the important indices that show the economic activity expectations for the future. Above 50 is considered as good sign for the country.
France’s Manufacturing PMI has remained below 50 for nearly two years, signaling a sustained industrial downturn that casts a pessimistic shadow over the economy’s prospects for 2025.
Conclusion
The France economic outlook for 2025 mixes hope with hurdles. GDP growth ranges from 0.8% to 1.6% through 2026. Inflation drops below 2%. Jobs stay strong at 7.3% unemployment. But big deficits (6.2% of GDP in 2024) and debt nearing 117% by 2026 loom large. Political unrest from a 2024 government collapse adds risk.
Household spending power and exports offer some lift. Still, low confidence, a sluggish Europe, and global tensions push for bold reforms. These steps are key to dodge a debt crisis in a shaky world.
