France Achieves 0.9% Growth Amid Political Turmoil

The French economy, the second largest in the Eurozone, experienced strong growth of 0.5% in the third quarter of 2025, marking the fastest quarterly growth rate since the second quarter of 2023, according to final data from the French National Institute of Statistics and Economic Studies (INSEE) released on November 28, 2025. Year-on-year, growth increased to 0.9%, surpassing Germany (+0.3%) and Italy, despite ongoing political turmoil and repeated government crises throughout the year.

Exports were the star performer of the French economy, soaring by 3.2% in the third quarter compared to 0.3% in the previous quarter, driven by the aviation and transport sector which recorded a surge of +13.4%, alongside strong performance in chemical and pharmaceutical industries. In contrast, imports rose at a slower pace (+1.3%), allowing foreign trade to contribute +0.6 percentage points to overall growth. Fixed investment rose by +0.5% after stagnating in the second quarter, supported by the telecommunications and information sectors (+1.7%) and capital goods (+1.7%), while household consumption remained flat at +0.1%.

The biggest challenge facing France lies in its acute financial crisis, with the budget deficit reaching 5.8% of GDP in 2024, expected to slightly decrease to 5.5% in 2025 and 4.9% in 2026, according to the European Commission. More concerning is the public debt, which surged from 113.2% in 2024, projected to rise to 120% of GDP by 2027. Interest payments on debt have risen to 2.3% of GDP, 0.2 percentage points higher than the previous year, putting increasing pressure on public finances. The government has committed to reducing the deficit to below 3% by 2029, but achieving this will require difficult austerity measures.

The French labor market has shown exceptional resilience, with the unemployment rate remaining at 7.5% until the second quarter of 2025, close to its lowest level since 2008, while the labor force participation rate increased to 75.3%, a rise of 2.5 percentage points since the end of 2019. However, employment slightly decreased (-0.1%) in 2025, and is expected to stabilize in 2026 before recovering by +0.2% in 2027. With employment growth slowing and the labor force remaining strong, productivity is expected to accelerate, but the unemployment rate may gradually rise to 8.2% by 2027.

The Bank of France announced on December 11, 2025, its intention to slightly raise growth forecasts from the previous estimate of 0.7% for 2025, with updated forecasts to be published on December 19. Governor François Villeroy de Galhau confirmed that the economy “is still experiencing economic activity despite uncertainty,” with expectations of 0.2% growth in the fourth quarter. Official forecasts indicate growth of 0.7%-0.8% in 2025, rising to 0.9%-1.0% in 2026, and 1.1% in 2027, supported by continued private consumption growth and improved investments. The message is clear: France demonstrates that economic stability can coexist with political chaos, but significant financial challenges threaten the sustainability of this model in the long term.