Economic Growth in France in 2024: A Mixed Outlook and Revised Forecasts for 2025

The French economy saw a slight contraction of 0.1% in the fourth quarter of 2024, largely due to a slowdown in household consumption, particularly in the services sector, as well as the aftereffects of the Paris 2024 Olympic and Paralympic Games. However, this decline was partially offset by a 1.1% increase in GDP for the entire year, in line with the initial forecasts from INSEE and the government.

Impact of Consumption and Foreign Trade on Growth

Between October and December, household consumption slowed significantly, dropping from +0.6% to +0.4%, which weighed on overall growth. At the same time, investments decreased by 0.1%, a smaller decline than the 0.3% drop observed during the summer. Corporate investments remained stable, while household investments saw a modest decrease of -0.3%.

Final domestic demand, excluding inventories, continued to grow but at a slower pace (+0.3 point after +0.4). However, the contribution from foreign trade was negative in the final quarter, with exports falling and imports rebounding, resulting in a contribution of -0.2 points to GDP.

For the whole of 2024, growth was driven by foreign trade, which contributed positively by +0.9 points (compared to +0.6 in 2023). In contrast, final domestic demand slowed, contributing +0.7 points instead of +0.9 the previous year.

While the 2024 forecasts were in line with expectations, the government has revised its 2025 growth forecast downward, now predicting a 0.9% increase in GDP instead of the initially forecasted 1.1%. Meanwhile, INSEE anticipates a modest 0.2% growth in the first two quarters of 2025, signaling a period of economic slowdown.