France cuts 2024 growth forecast as outlook darkens

France's official statistics agency INSEE on Feb. 7 forecast that the euro zone's second-biggest economy was set to expand just 0.2% in the first quarter from the previous three months, when it flatlined, and that it would maintain that rate in the second quarter.

French Finance Minister Bruno Le Maire said the government had lowered its forecast for 2024 GDP growth to 1% from 1.4% as the conflicts in Ukraine and the Middle East and a slowdown at top trading partners Germany and China darkened the outlook.

In an interview with French television TF1, he also said that state spending would be cut by 10 billion euros across all departments and agencies. He added that there would be no tax increases and no cuts in social security payments to citizens.

The new government forecast is more in line with a series of recent growth outlook downgrades by the European Commission, the OECD and French statistics agency INSEE. The European Commission on Feb. 15 cut its 2024 GDP growth forecast for France to 0.9% from the 1.2% seen in November, and it cut its forecast for Germany - the EU's biggest economy - to 0.3% from 0.8%.

Earlier this month, the Paris-based Organisation for Economic Cooperation and Development cut its 2024 French growth forecast to 0.6% from 0.8% previously. France's official statistics agency INSEE on Feb. 7 forecast that the euro zone's second-biggest economy was set to expand just 0.2% in the first quarter from the previous three months, when it flatlined, and that it would maintain that rate in the second quarter.