France Faces Economic Challenges Amidst Political Uncertainty

France's economic growth will remain weak yet steady into the first half of 2025, with political turmoil over the pending 2025 budget affecting consumer confidence and business activities. INSEE predicts stagnant growth in Q4 2024, followed by minor gains in early 2025 driven by export and consumer activities.

France's economy is projected to experience weak yet steady growth through mid-2025 amid ongoing political conflicts over the 2025 budget, according to INSEE. The standoff poses risks to consumer and business sentiments, potentially hindering economic activities in the euro zone's second-largest economy.

INSEE forecasts the economy will stagnate in the final quarter of 2024, resulting in a full-year growth of 1.1%. Growth is expected to climb by 0.2% in both the first and second quarters of 2025, aided by increased exports and a slight boost in consumer spending.

The lack of a new budget due to political opposition is creating uncertainty, as temporary legislation is rushed through parliament to avert a governmental shutdown. INSEE anticipates a minor inflation rise from 1.3% in November to 1.5% in January, before decreasing mid-year with falling electricity prices.

(With inputs from agencies.)