(Reuters) – The French economy is about to experience weak growth until the end of 2025, due to the weakness of manufacturing activity and budgetary restrictions in the public sector that weigh on production, INSEE announced on Wednesday.

The second economy in the euro zone should maintain a growth rate per quarter of 0.2% from the second quarter until the end of the year, INSEE said in its last forecasts.

Manufacturing production would remain stable until the end of the year, due to the weakness of production prospects and order books. Consumer spending will only provide a modest support, which is temporarily accelerating during the summer to reach growth of 0.4% before slowing down to +0.3% in the fourth quarter.

For the whole year, the economy should grow by 0.6%, against 1.1% last year, consumer spending and the reconstruction of stocks of companies only partially compensating for the weakness of foreign trade.

This figure is slightly lower than the forecast of growth of 0.7% in 2025 established by the government, which could complicate its efforts to bring the public deficit back to the set target of 5.4% of GDP.

Inflation was estimated at only 1% on average this year and even 0.8% according to the harmonized calculation method at the EU level, due to the drop in electricity prices and a price war between telecommunications operators.

Household consumption, a traditional engine of French growth, is expected to increase by 0.7% this year, which corresponds to purchasing power gains, while the savings rate should remain stable at a high level of 18.2%.

Overall, the contribution of domestic demand to growth this year would be reduced to 0.5 percentage points, compared to 0.6 points in 2024, while foreign trade would slow growth of 0.7 points after having supported it from 1.3 points last year.

(Written by Leigh Thomas, Mara Vîlcu for the , edited by Blandine Hénault)

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