Why is the French economy resisting?

The French economy is showing signs of resilience. The French National Institute of Statistics and Economic Studies (INSEE) has raised its growth forecast for 2025: GDP is expected to grow by 0.8%, compared to the 0.6% initially forecast before the summer. This revision is due in particular to the strong performance of activity in the spring.

Some sectors are particularly performing well: tourism, real estate, aeronautics, and agriculture are all doing well. Construction is also regaining strength, while the automotive industry remains struggling.

But the French economy must contend with a complex context. Headwinds come from abroad, with the customs duties introduced by Donald Trump, but also from within, with persistent political instability since the dissolution of the government in June 2024.

According to the INSEE, this instability is reflected in pessimistic and cautious behavior: Consumers, despite higher purchasing power gains than in the rest of Europe, continue to save massively.

Unemployment fears are at their highest level in ten years (excluding the health crisis), while employment remains stable and unemployment is expected to increase only slightly, to 7.6% by the end of the year.

On the business side, investment is restarting more slowly than elsewhere, even though their financial situation remains generally healthy. In other words, if political uncertainty were to dissipate, French growth could resume more quickly.

Finally, some are concerned about the possible downgrade of France's rating by Fitch. According to INSEE, the impact would be limited: financial markets have already anticipated this eventuality. French interest rates are comparable to those of lower-rated countries, such as Italy. Fitch could signal that the ability to repay current debt is not in question, but express doubts about the governments' ability to reduce future deficits, which would increase future debt.

Despite these uncertainties, the message remains clear: the French economy is holding up well, and certain sectors are showing encouraging momentum, a sign that growth could still surprise on the upside.