PARIS, March 25 (Xinhua) -- France's central bank on Wednesday slightly lowered its economic growth forecast for 2026, warning that rising energy prices and mounting geopolitical tensions are expected to weigh on the outlook.
In its latest projections, the Banque de France said the economy is now expected to expand by 0.9 percent in 2026, down from a 1.0 percent estimate issued in December 2025.
The central bank noted that economic activity showed stronger-than-expected resilience at the end of 2025, with momentum carrying into the first quarter of 2026. However, since March, higher energy costs and a worsening geopolitical environment have clouded the outlook.
Under a baseline scenario assuming a relatively swift resolution of the Middle East conflict, growth is projected to ease further to 0.8 percent in 2027 before recovering to 1.2 percent in 2028, supported mainly by a rebound in exports and private domestic demand.
Household consumption is expected to remain the main driver of domestic demand over the period, underpinned by rising wages, improving purchasing power, and a gradual recovery in business investment.
Inflation is forecast to increase from an average of 0.9 percent in 2025 to 1.7 percent in 2026, largely due to higher energy prices, before temporarily easing to 1.4 percent in 2027 as energy markets stabilize.
The projections come against the backdrop of heightened global uncertainty after the United States and Israel launched large-scale attacks on Iran on Feb. 28, sending oil prices soaring and shaking the global economy.
