PARIS, June 11 (Reuters) – France’s economy is expected to slow more sharply this year due to U.S. trade tensions impacting demand for French exports, according to the central bank’s quarterly outlook. After expanding by 1.1% last year, the eurozone’s second-largest economy is now forecast to grow only 0.6% in 2023, revised down from a previous estimate of 0.7%. The Bank of France estimates that tariff threats and economic uncertainty will cumulatively cost the economy 0.4 percentage points of GDP through 2027, with half of this impact already accounted for in prior forecasts. The central bank noted that the main issue stems from the uncertainty surrounding tariffs rather than the tariffs themselves, assuming they remain at the 10% level threatened by the Trump administration. “This unpredictability amplifies the French and European challenge of sluggish growth,” said Bank of France Governor Francois Villeroy de Galhau. Monthly surveys suggest the economy will grow just 0.1% in the second quarter, unchanged from the first. Beyond 2023, growth is projected to strengthen to 1.0% in 2026 and 1.2% in 2027, though these figures are slightly lower than previous projections. Domestic demand and inventory rebuilding will support activity this year, while foreign trade will weigh negatively. The recovery will be driven by real wage gains and lower interest rates boosting consumer demand and private investments. Inflation forecasts were also revised downward, with EU harmonized consumer price inflation expected to average 1.0% this year, down from 1.3% previously. Inflation is seen at 1.4% in 2026 and 1.8% in 2027.
— new from Reuters
