The French economy contracted by 0.1% in Q4 2024, confirming preliminary estimates and reversing the 0.4% expansion seen in the previous quarter. This marks the first economic contraction since Q1 2023 and is partly attributed to a post-Olympics slowdown, following the temporary boost from the Paris Olympic and Paralympic Games.
France Q4 GDP contraction confirmed at 0.1%
The waning impact of tourism, event-related spending, and infrastructure investments weighed on economic activity, highlighting the challenge of sustaining momentum once major international events conclude.
Household consumption growth slowed to 0.3% from 0.6% in Q3, as service consumption unexpectedly declined (-0.1% vs. +0.8%), likely reflecting lower spending on hospitality, entertainment, and transport services after the Olympics. At the same time, goods consumption rose at a weaker pace (+0.2% vs. +0.4%), suggesting that cautious consumer sentiment and persistent inflationary pressures may have curbed discretionary spending. Meanwhile, fixed investment continued to decline (-0.1% vs. -0.7%), led by a sharper drop in construction investment, indicating ongoing challenges in the real estate sector amid high interest rates and subdued demand.
Net trade had a neutral impact on GDP
Net trade had a neutral impact on GDP, with both exports and imports rising by 0.4%. While resilient external demand provided some support, it was not enough to offset domestic weaknesses. Additionally, inventory changes acted as a drag on growth, subtracting 0.3 percentage points, in contrast to the positive 0.3-point contribution in Q3, indicating that businesses scaled back stock accumulation in response to softer demand.
Year-over-year figures
On an annual basis, the economy expanded by 0.6%, slightly below the flash estimate of 0.7%, marking the slowest growth since the contraction in Q4 2020, when the economy was still reeling from the pandemic’s impact. For the full year, GDP grew by 1.1%, matching 2023’s pace but underscoring the broader trend of sluggish economic growth in France. Looking ahead, policymakers face mounting pressure to implement measures that can stimulate economic activity, particularly as high borrowing costs, geopolitical uncertainties, and slowing global demand continue to pose risks to the outlook. With the European Central Bank maintaining a cautious stance on monetary policy, attention will likely turn to domestic fiscal policies and structural reforms as key levers to reignite growth in 2025.
