Growth: The Bank of France will revise its 2026 forecasts downwards

The Bank of France is preparing to downplay its economic outlook for 2026. In his first public address since taking office, the new governor, Emmanuel Moulin, confirmed that the growth forecasts to be published in mid-June will be lower than the estimates released in March. The institution had then projected GDP growth of 0,9%, a figure that will now be revised downward in a context marked by significant national and international economic uncertainties.

This revision reflects the difficulties faced by the French economy since the beginning of the year. Emmanuel Moulin acknowledged that the first months of 2026 had been more challenging than anticipated, particularly following INSEE's publication of a 0,1% decline in GDP in the first quarter. While the governor believes that certain exceptional factors contributed to this underperformance, he considers several indicators to warrant caution for the remainder of the year.

Consumption is still too low

Among the main causes for concern is the persistent weakness in household consumption. Despite the slowdown in inflation observed in recent months, the French continue to limit their spending, favoring savings in an economic environment deemed uncertain. This consumer caution is directly impacting the activity of many sectors, particularly retail, services, and certain industrial sectors dependent on domestic demand.

The new governor also highlighted the poor performance of French exports in the first quarter. The deterioration in foreign trade contributed to the decline in economic activity and reflects a more complex international environment. The slowdown observed among several of France's trading partners, as well as persistent geopolitical tensions, continue to affect global trade and business confidence.

Higher than expected inflation

Beyond growth, the Bank of France also anticipates higher-than-expected inflation. Emmanuel Moulin indicated that the new projections would simultaneously show "less growth and more inflation," although the exact extent of this shift will depend on the various scenarios studied by the institution's economists. This situation complicates the economic equation for the coming months, as the slowdown in activity could coincide with a persistent rise in prices in certain sectors.

The international environment also plays a significant role in this revision. Rising energy prices linked to tensions in the Middle East, global trade uncertainties, and supply difficulties in certain industries are fueling inflationary risks. These factors make economic forecasting particularly challenging for central banks and financial institutions.

The IMF and the government are already more cautious.

The Bank of France is not the only one to have revised its outlook downwards. The International Monetary Fund had already lowered its growth forecast for France in 2026 in May, from 0,9% to 0,7%. For its part, the government also adjusted its economic scenario in mid-April, reducing its growth target to 0,9%, down from 1% previously.

This convergence of analyses points to a more pronounced slowdown than anticipated just a few months ago. While France is expected to avoid recession, the prospects for recovery now appear more limited, with weak growth and reduced fiscal space to further support the economy.

The priorities of the new governor

Having taken the helm of the Bank of France just a few days ago, Emmanuel Moulin used this first public address to reiterate the main points of his mandate. He notably highlighted monetary strategy, European financial sovereignty, and the stability of the financial system as key priorities for the coming years.

Due to the period of restraint preceding this week's European Central Bank meeting, the governor declined to comment on future monetary policy decisions. Financial markets, however, remain attentive to the ECB's upcoming announcements as growth prospects gradually deteriorate in several European economies, including France.