PARIS (Reuters) – The French economy should progress a little more strongly than expected previously in 2025, the INSEE announced on Wednesday, in a context of international and national uncertainties which could however weaken the activity.

In its new conjuncture note published Wednesday, INSEE indicated that gross domestic product growth (GDP) would reach 0.8% over the entire year 2025 in France against a previous forecast of 0.6% in June and while the French government anticipates growth of 0.7% for this year.

The growth rate would reach 0.3% in the third quarter of 2025 and 0.2% in the fourth quarter, against 0.2% initially planned for both periods.

In the second quarter, GDP increased by 0.3%, against +0.2% expected, supported by tourist exchanges and “the exceptional dynamism of manufacturing production in June, in particular in aeronautics”.

After growth of 1.1% in 2024, activity in France would be maintained in flow in 2025 by a few branches such as tourism, the real estate market, agriculture and aeronautics where production would increase by 7% over the year, detailed INSEE.

“In total, the engines of the French economy in 2025 do not seem to be lasting. The domestic demand would slow down, in particular due to household consumption, and growth would be accountable by a strong movement to reconstruct in stocks, after two years when companies had massively asked them,” worried INSEE.

“The main good news comes from the building: after three years of strong withdrawal, the activity would stop back, and companies in the sector are much more optimistic about their activity prospects,” said the institution.

Household consumption, a traditional engine of French growth, should increase by 0.5%this year, less quickly than purchasing power (+0.8%), while the savings rate would reach 18.5%, at its highest level for 45 years (except for two years of health crisis).

“Several vagaries surround this forecast,” warned INSEE, citing “the unpredictability of the American administration”, the volatile oil market and political uncertainty in France which could weaken activity or “finally unlock purchasing behaviors” in the event of rapid recovery of confidence.

Thanks to a “almost stabilization of employment”, the unemployment rate would increase “a little” at the end of the year to 7.6% of the active population.

Inflation would be 1.2% over one year in December 2025 and inflation underlying 1.5%, slightly increased compared to August ( +0.9% and +1.3%), also said INSEE.

(Written by Bertrand de Meyer, edited by Blandine Hénault)

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