Trésor-Info - Publications de la direction générale du Trésor - Economic-growth

Review of the French Government’s Economic Forecasts for 2024

2025-08-28T00:00:00+02:00

When drawing up the macroeconomic scenario for the 2024 Budget Bill presented in September 2023, we expected that 2024 would see a gradual cushioning of the shocks that had hit the economy. As such, expectations focused on an upswing in growth bolstered by a ramp-up in household consumption. The main contingency identified in the forecast concerned the pace and extent to which monetary tightening would affect both real GDP and the financial sphere.

GDP growth in 2024 (up 1.2% according to INSEE’s annual accounts published in May 2025) fell short of the 2024 Budget Bill forecast of 1.4% and broke down differently than expected due to a fresh wave of shocks that were largely unforeseeable in autumn 2023.

The deterioration in the international environment, particularly the second consecutive year of recession in Germany, curbed French exports. Meanwhile, uncertainties at both international (tension in the Middle East in particular) and national level (dissolution of the French National Assembly) put a drag on investment. The catch-up following productivity losses since the COVID-19 pandemic has been faster than anticipated, leading to a more pronounced slowdown in employment. Lastly, the faster-than-anticipated drop in inflation failed to boost consumption due to the less favourable breakdown of purchasing power gains.

Nevertheless, some of these negative shocks were absorbed by a fall in imports, partly replaced by inventory rundowns, and by rising public demand, mainly concerning local authorities and healthcare spending. Despite the adverse impact on the government deficit, increased public demand naturally buoyed up economic activity.

Review of the French Government’s Economic Forecasts for 2023 and 2024

2024-12-19T00:00:00+01:00

The macroeconomic scenario of the 2023 Budget Bill, presented in September 2022, was drawn up amid great uncertainty. The repercussions of the Russian offensive in Ukraine on energy supply in particular, and the impact of monetary tightening in response to soaring inflation were major unknowns when calculating forecasts.

Despite this uncertainty, 2023 GDP growth (0.9% based on annual INSEE accounts published in May 2024) nearly matched the 2023 Budget Bill forecast (1.0%). The Consensus Forecasts, which estimated growth of 0.6% in September 2022 and which had hit a low point of 0.1% in December 2022, gradually converged with the French government forecast.

The main economic forecast assumptions were confirmed: winter 2022/2023 saw no energy supply shortages, and the French economy benefited from a catch-up effect, particularly in aircraft manufacturing and electricity generation. Growth drivers on the other hand were more balanced than envisaged in the Budget Bill: growth was sustained to a greater degree by foreign trade and to a lesser extent by consumption, with the savings rate remaining high. While business investment proved more resilient than expected, household investment fell further.

The 2023 Budget Bill forecast predicted a peak in inflation in early 2023, followed by a gradual decrease. This forecast was correct, with inflation reaching its peak in February 2023 and declining for the rest of the year, due to a drop in energy prices and then in food prices. Overall inflation for the year was however higher (4.9%) than the 2023 Budget Bill forecast (4.2%), which itself was higher than the Consensus Forecasts (3.6%).

The macroeconomic scenario underlying the 2024 Budget Bill, which was submitted in September 2023, forecast a pickup in growth in 2024 (1.4%). This growth forecast was reviewed downwards in February 2024: the adjusted economic scenario was set out in the 2024-2027 Stability Programme published in April 2024. This forecast for 2024 was adjusted upwards to 1.1% in the 2025 Budget Bill submitted in October 2024. The adjustment to the initial forecast was made primarily because of a less buoyant international environment and more sluggish consumption, despite faster disinflation than expected.

Nowcasting French GDP Growth During Exceptional Periods

2024-08-22T00:00:00+02:00

Nowcasting, or very short-term forecasting, is a crucial tool for understanding major changes in the economy and detecting turning points in the business cycle. Nowcasting is the first stage in the economic forecasts at the two-year horizon established by the Directorate General of the Treasury to prepare France’s budget acts and stability programmes.

In the period from 2020 to 2023, supply difficulties arising from the COVID-19 health crisis and Russia’s war of aggression in Ukraine played a greater role in restricting economic activity than demand for firms’ output (see Chart). France’s economic trajectory during this exceptional period was thus influenced more by supply factors than by demand factors that typically dominate.

The predictive performance of economic models based explicitly or implicitly on demand variables thus worsened during the crisis period, notably in the case of the nowcasting models that rely on composite business climate indicators to predict GDP growth.

Alternative models incorporating automatic input variable selection can be used to identify, from a vast array of data sources, those items that make the greatest contribution to improving predictive performance. Such models are simple to interpret and econometrically similar to conventional models.

For the recent period, an ex-post estimation shows that variables such as supply constraints in manufacturing, which are typically absent from conventional models, would have made the greatest contribution to improving short-term GDP forecasting for France.