In a significant adjustment reflecting ongoing global trade tensions, French Finance Minister Eric Lombard announced on April 9, 2025, that the government has revised its growth forecast for the year 2025. The new projection indicates that France, the euro zone's second-largest economy, is expected to grow by only 0.7 percent, down from the previously estimated 0.9 percent.
This revision comes amid increasing uncertainty in international trade, particularly following U.S. President Donald Trump's recent announcement to suspend tariffs on all countries except China for three months. Lombard expressed cautious optimism about the U.S. decision, stating, "It's good news, but we must remain calm," and emphasized the hope for a new agreement with the Americans.
The Bank of France had already adjusted its own growth forecast to 0.7 percent in March 2025, aligning with the government’s new figures. However, the French Economic Observatory (OFCE) took a more conservative stance, lowering its forecast to just 0.5 percent on the same day as Lombard's announcement.
When asked whether further downward revisions might be necessary, Lombard indicated that such changes would depend on upcoming negotiations with the United States and the decisions regarding customs duties. He remarked, "If we succeed in lowering tariffs, we could even get better, and if not, we will see." This highlights the delicate balance that France must navigate as it responds to shifting economic landscapes.
Despite the challenging economic outlook, Lombard ruled out any plans to raise taxes in 2025, signaling the government's commitment to maintaining fiscal stability while addressing growth concerns. The economic landscape is further complicated by Italy's recent decision to halve its growth forecast for 2025 to 0.6 percent, reflecting a broader impact of the trade tensions on European economies.
Bank of France Governor Francois Villeroy de Galhau welcomed the U.S. tariff suspension, describing it as "a return to economic realism and a little reality." However, he also cautioned that U.S. trade policy remains unpredictable, which could have negative repercussions for Europe as a whole.
As the global economic situation evolves, France's response will be closely scrutinized, particularly in light of its efforts to balance growth with fiscal responsibility. The upcoming negotiations with the United States will be pivotal in shaping the future economic landscape for France and its European neighbors.
