France: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for France

The 2024 Article IV Consultation with France discusses that strong and timely policy response helped cushion the impact of the coronavirus disease 2019 pandemic and the energy crisis resulting from Russia’s war in Ukraine. Despite a recovery slowdown in 2023, the French economy has remained relatively resilient in the face of financial tightening and weaker euro area external demand. Nevertheless, the crisis response and slower-than-expected recovery have weighed on public finances, with a sizable fiscal underperformance in 2023 reducing fiscal space at a time of rising investment needs for the green and digital transformation. While financial conditions started improving in early 2024, market pressures on sovereign spreads and stock markets rose in early June following the European elections amid political uncertainty. Growth is projected to gradually reach 1.3 percent by 2025 from 0.9 percent in 2024. The disinflationary process is on track, with headline inflation expected to reach 2.3 percent in 2024 and return to target in the first half of 2025. The outlook remains subject to high uncertainty. Heightened political fragmentation and policy uncertainty domestically could delay fiscal consolidation and reform efforts, weighing on confidence and public finances. The French authorities should continue to advance structural reforms to support jobs and raise productivity, amid ongoing geopolitical and economic transitions.