France's economy shows signs of gradual recovery

The French economy is showing signs of improvement. In March, the business climate index rose to 97, up from 96 in February. This is the third month in a row that the index has increased. The retail sector is feeling more optimistic about future activities and orders. However, the industry sector is facing challenges due to declining foreign orders. Employment sentiment also improved in March, gaining 3 points, but it is still below the long-term average. These trends suggest that the economy may have hit its lowest point and could slowly recover in the coming months. Economic growth was nearly flat in early 2025 after a slight contraction at the end of 2024. Expectations for growth in the second quarter are around 0.2%. However, factors like increasing customs duties from the U.S. on European goods could hinder exports and business confidence. France's fiscal policy aims to lower the public deficit, which may reduce household purchasing power and impact businesses. Long-term interest rates are rising, which could also hurt investment from both businesses and households. These challenges could keep household confidence low and lead to a high saving rate among individuals. Overall, GDP growth is forecasted at 0.6% for 2025, down from 1.1% in 2024, with slower growth expected compared to the broader European average for the next couple of years.