French economy to return to growth in Q1 – central bank

The French economy will return to growth in the first quarter thanks to a recovery in the services sector. This forecast was made by the country’s central bank in its monthly forecast, Reuters reports.

According to the regulator, the economy is expected to grow by 0.1-0.2% in the first quarter compared to the fourth quarter of 2024. In October-December, the country’s GDP declined by 0.1% q/q.

While the services sector will be the driving force behind growth in the first quarter of this year, manufacturing is expected to remain flat after contracting in the previous quarter.

At the same time, according to the central bank’s monthly business sentiment survey of 8,500 companies, businesses reported increased uncertainty, citing the turbulent domestic political situation and fears of a potential increase in US tariffs.

The survey also showed that February is likely to see a slowdown in activity, particularly in services, and stabilisation in manufacturing, with aircraft construction expected to grow in contrast to chemical and metalworking industries. Demand in the construction sector, according to companies, remains very cautious in both individual and collective housing construction, as well as in terms of public sector orders.

Last December, the Bank of France lowered its GDP growth forecast for 2025 to 0.9% from 1.2% previously expected. The country’s economic growth is expected to recover to 1.3% in 2026 and 2027. The regulator expected inflation to remain below the ECB’s 2% target over the next three years, in particular, to decline to 1.6% in 2025 and accelerate to 1.7% in 2026.