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France GDP growth is expected to ease from 0.9% in 2023 to 0.8% 2024 before picking up to 1.2% in 2025. After a slowdown in 2024, exports will recover in 2025 owing to a moderate improvement in external demand. Continued tightness in the labour market will maintain upward pressure on wages, allowing for some gains in purchasing power and a gradual improvement in private consumption, as inflation is expected to ease from 5.7% in 2023 to 2.7% in 2024 and 2.2% in 2025. However, less favourable financing conditions due to tighter monetary policy will continue to weigh on investment and consumption. Fiscal support measures adopted to shield households and firms from high energy and food prices should be phased out, accelerating the much-needed fiscal consolidation. Despite announced spending cuts, the budget deficit is expected to remain large, at 4.6% of GDP in 2025. Efforts to promote green alternatives to fossil fuels, housing renovation and energy savings should be strengthened. Enhancing access to high-quality education will be key to achieve greater equity and further reduce gender imbalances. Activity is slowing in the second half of 2023 GDP growth eased to 0.1% in the third quarter of 2023, and business survey indicators point to persisting weakness in growth in the last quarter of the year. The composite purchasing managers index remained well below the expansion threshold in October, while the Insee business climate indicator fell below its long-term average. Employment continued to increase in the first half of 2023 and the unemployment rate has remained broadly stable since the beginning of the year, standing at 7.3% in September 2023 against 7.2% in December 2022. Inflation remains high at 4.5% in October 2023, according to the harmonised index. Core inflation has fallen to 3.5%, from a peak of 4.7% in April, but energy prices have recently rebounded, and annual food price inflation remains elevated at 8.0%. Amid a tight labour market and persistent inflation, the average nominal wage per employee continues to grow strongly at 5.7% year-on-year.
France 1
Source: OECD Economic Outlook 114 database. StatLink 2 https://stat.link/6as58f
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 2: PRELIMINARY VERSION © OECD 2023