French Economy to Grow 0.6% This Year, Insee Says

France's Economy Projected to Grow 0.6% This Year, Says INSEE

PARIS (Reuters) -France's economy is on course for sluggish growth through the whole of 2025 as weak manufacturing activity and public sector belt-tightening weigh on output, national statistics agency INSEE forecast on Wednesday.

The euro zone's second-biggest economy is expected to maintain a quarterly growth rate of 0.2% from the second quarter on through the rest of the year, INSEE said in its latest outlook.

Manufacturing output will remain flat through year-end amid weak production prospects and poor order books. Consumer spending will provide only modest support, accelerating temporarily in the summer to 0.4% quarterly growth before slowing to 0.3% in the fourth quarter. 

For the full year, the economy would grow 0.6%, down from 1.1% last year as consumer spending and rebuilding of business inventories only partially offset weak foreign trade.

That is marginally less than the 0.7% the government has forecast for the year, which could complicate its efforts to keep its budget deficit to its target of 5.4% of economic output.

Inflation was seen averaging only 1% this year and even lower at 0.8% using an EU-harmonised method for calculation, due to lower power prices and a price war among telecoms operators.

Household consumption, the traditional driver of French growth, was forecast to rise 0.7% this year, matching purchasing power gains, while the savings rate was seen stable at a high level of 18.2%.

Overall, domestic demand's contribution to growth this year would ease to 0.5 percentage points from 0.6 points in 2024, while external trade would drag growth by 0.7 points after supporting it by 1.3 points last year.

(Reporting by Leigh ThomasEditing by Alexandra Hudson)