Since the beginning of the year, the world economy has held up fairly well in the face of the new US administration’s gradual and chaotic increase in customs duties to levels not seen since the Second World War. This major resurgence of US protectionism led to a surge in world trade at the start of the year, with American companies rushing to build up inventories before the new tariff barriers came into force. Trade then experienced a fairly moderate decline in the spring, as Asian manufacturers quickly redirected their production to their neighbours. Fearing oversupply, commodity markets have been on a general downward trend since the beginning of the year, easing inflationary pressures in advanced economies and facilitating monetary easing by the central banks.

The US economy is certainly slowing down, particularly due to the faltering labour market, but it seems far from recession, with domestic demand remaining fairly robust. Asian economies appear to have found a solution with the intensification of regional trade. The Eurozone, on the other hand, has emerged weakened: the euro has appreciated significantly, further damaging competitiveness already undermined by the energy crisis in 2022–2023 and fierce competition from Chinese manufacturers. However, there is a glimmer of hope on the Old Continent, where investment is picking up: property markets are starting to recover after hitting rock bottom, companies are beginning to invest in capital goods again, and terms of trade are improving thanks to lower oil prices. Within the Eurozone, after two years of recession, Germany is expected to begin a gradual turnaround with GDP set to rise slightly in 2025, while growth is expected to be stronger in Italy and, above all, in Spain.

France is moving in the opposite direction to this tentative upturn in Europe. Admittedly, growth held up well in the spring (+0.3% after +0.1%) and is not expected to slow down between now and the end of the year (+0.3% in the summer and then +0.2% at the end of the year): GDP is expected to grow by 0.8% over 2025 (+0.6% not adjusted for working days), but this is mainly because a few sectors are keeping activity afloat (tourism, real estate, aeronautics, agriculture). Investment is recovering slightly more slowly than elsewhere, industry is losing a little more market share, and the business climate has remained below its long-term average since summer 2024 with no sign of improvement. Above all, consumption is not picking up, with French households appearing to be in a paradoxical situation: with inflation remaining lower than in other Eurozone countries, at +1.2% year on year in December, their purchasing power gains have been greater than elsewhere in Europe, but their spending is less dynamic and the savings ratio is breaking new records every quarter. In business tendency surveys, consumer pessimism is evident: household confidence had been trending upwards until summer 2024, but has been declining almost continuously since then. This difference between individual perceptions and actual aggregate measurements is evident, for example, in the labour market: fears about unemployment are at their highest in ten years (except during the health crisis), even though employment is holding up and unemployment is expected to rise only slightly by the end of the year, to 7.6%.

Overall, the drivers of the French economy in 2025 do not appear to be sustainable. Domestic demand is expected to slow, particularly household consumption, and growth is expected to be driven by a sharp increase in inventory rebuilding, after two years of massive inventory drawdowns by companies. The main good news comes from the construction sector: after three years of sharp decline, activity is expected to stop falling, and companies in the sector are significantly more optimistic about their business prospects.

This forecast is subject to a number of uncertainties. Internationally, even though the United States’ trade decisions and potential retaliation from partner economies appear to be stabilising, the US administration remains highly unpredictable. The oil market also remains highly volatile: despite a likely oversupply, renewed tensions could wipe out the gains in terms of trade that advanced economies have enjoyed since the beginning of the year. In France, uncertainty has risen again with the fall of the government on 8 September, although movements on the financial markets remain below those recorded in the summer of 2024 following the dissolution of the National Assembly. If this uncertainty persists, it will weaken the already weak economy, but conversely, a rapid recovery in confidence could finally unlock purchasing behaviour.