IMF Executive Board Concludes 2026 Article IV Consultation with France
IMF News, July 22, 2026
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- Published: July 22, 2026
Summary judgment
- The French economy has remained resilient but faces a more challenging environment as headwinds from the Middle East war have started to weigh on activity and higher energy prices have pushed up inflation.
- The authorities’ response to the energy shock has so far been appropriate and should remain limited, temporary, and targeted towards the most vulnerable, while preserving market incentives and containing fiscal costs.
- Amid high fiscal deficits, modest growth, and rising spending pressures, the upcoming electoral cycle provides an important opportunity for France to articulate a well‑defined multi‑year strategy to unlock its growth potential and support fiscal consolidation.
Executive Board Assessment
- Directors agreed with the thrust of the staff appraisal and welcomed the economy's continued resilience despite external shocks and domestic policy uncertainty.
- Key guidance from Directors:
- Press ahead with fiscal consolidation while pursuing ambitious structural reforms to unlock France's potential and support durable, inclusive growth.
- Implement credible, growth-friendly, and expenditure-led fiscal consolidation to bring the deficit below 3 percent of GDP by 2029 and durably entrench debt sustainability.
- Anchor fiscal adjustment in a clearly specified multi-year strategy composed of high-quality measures and structural reforms to reprioritize spending, improve efficiency, address aging pressures, and preserve room for priority needs, while protecting the most vulnerable.
- Ensure robust contingency planning.
Macroeconomic outlook and risks
- Recent developments:
- The French economy expanded at a moderate pace in 2025, despite domestic and external shocks, while inflation remained contained.
- France’s fiscal stance strengthened in 2025, with the deficit declining to 5.1 percent of GDP—below the initial budget target—reflecting proactive spending management.
- The banking sector remained resilient, with financial stability risks contained, supported by solid buffers and proactive supervisory efforts.
- Projections and scenario considerations:
- Real GDP growth is projected to slow from 0.9 to 0.6 percent in 2026, as spillovers from the Middle East war raise inflation and dampen domestic demand.
- Growth is projected to recover gradually in 2027 as external conditions stabilize.
- Downside risks: rising geoeconomic tensions (including in the Middle East), the potential for a disorderly AI correction, and heightened political uncertainty ahead of next year’s presidential elections.
- Upside scenario: easing geoeconomic tensions and renewed political consensus around ambitious structural reforms—supported by deeper EU coordination—could boost confidence, investment, and overall growth.
Structural and labor market policy priorities
- Directors agreed ambitious domestic and EU-level reforms would strengthen France's economic resilience and growth performance.
- Reduce regulatory barriers, mobilize private financing, and deploy well-targeted instruments to support innovation and the green transition.
- Deepen the single market to amplify the impact of domestic reforms.
- Labor market and human capital priorities:
- Strengthen work incentives, foster longer and less fragmented careers, support female labor force participation, and better integrate migrants.
- Promote more effective skills development aligned with AI and digital demands, ease bottlenecks, and support labor mobility.
Financial sector and stability
- Financial stability risks remain contained, supported by proactive supervisory efforts.
- Directors welcomed ongoing vigilance in line with the 2025 FSAP recommendations:
- Deepen supervisors' understanding of risks from investment funds and broader financial sector linkages.
- Strengthen cyber preparedness.
Key statistics (Table 1: France: Selected Economic Indicators, 2023–28)
- Real Economy (change in percent)
- Real GDP: 2023: 1.9; 2024: 1.4; 2025: 0.9; 2026: 0.6; 2027: 1.2
- Domestic demand: 2023: 1.0; 2024: 0.2; 2025: 0.4; 2026: 1.1
- Foreign balance (contr. to GDP growth): 2023: -0.2; 2024: 0.3; 2025: 0.1
- CPI (year average): 2023: 5.7; 2024: 2.3; 2025: 1.7
- GDP deflator: 2023: 5.0; 2024: 2.1; 2025: 1.5
- Public Finance (percent of GDP)
- General government balance: 2023: -5.4; 2024: -5.8; 2025: -5.1; 2026: -5.2; 2027: -4.9; 2028: -4.5
- Revenue: 2023: 51.3; 2024: 51.2; 2025: 52.2; 2026: 52.4; 2027: 52.5; 2028: 52.6
- Expenditure: 2023: 56.8; 2024: 57.0; 2025: 57.3; 2026: 57.6; 2027: 57.4; 2028: 57.1
- Primary balance: 2023: -3.7; 2024: -3.9; 2025: -3.0; 2026: -2.7; 2027: -2.3; 2028: -1.7
- Structural balance (percent of pot. GDP): 2023: -5.3; 2024: -5.7; 2025: -5.0; 2026: -4.7; 2027: -4.3
- General government gross debt: 2023: 109.5; 2024: 112.6; 2025: 115.7; 2026: 118.5; 2027: 120.3; 2028: 121.1
- Labor Market (percent change / percent)
- Employment: 2023: 1.3; 2024: -0.1; 2025: 0.5
- Unemployment rate (percent): 2023: 7.3; 2024: 7.5; 2025: 7.7; 2026: 8.2; 2027: 8.0; 2028: 7.8
- Credit and Interest Rates (percent)
- Growth of credit to the private non-financial sector: 2023: 3.6; 2024: 1.8
- Money market rate (Euro area): 2023: 3.4; 2024: 2.2
- Government bond yield, 10-year: 2023: 3.0
- Balance of Payments (percent of GDP)
- Current account: 2023: -1.0; 2024: -0.3; 2025: -0.8; 2026: -0.4
- Trade balance of goods and services: 2023: -1.4; 2024: -0.6; 2025: 0.0
- Exports of goods and services: 2023: 34.4; 2024: 33.7; 2025: 33.5; 2026: 32.8; 2027: 33.0; 2028: 32.9
- Imports of goods and services: 2023: -35.7; 2024: -33.8; 2025: -33.7; 2026: -33.5; 2027: -33.3; 2028: -32.9
- Official reserves (US$ billion): 2023: 79.2; 2024: 78.4; 2025: 86.0
- Exchange Rates
- Euro per U.S. dollar, period average: 2023: 0.92; 2024: 0.89
- NEER, ULC-styled (2010=100, +=appreciation): 2023: 97.0; 2024: 97.3; 2025: 98.2
- REER, ULC-based (2010=100, +=appreciation): 2023: 91.5; 2024: 89.2; 2025: 92.0
- Potential Output and Output Gap
- Potential output (change in percent): 2023: 0.8
- Memo: per working age person: 2023: 0.7
Policy recommendations (summarized)
- Fiscal policy:
- Pursue credible, growth-friendly, and expenditure-led consolidation to bring the deficit below 3 percent of GDP by 2029.
- Base consolidation on a clearly specified multi-year strategy with high-quality measures and structural reforms, reprioritizing spending and improving efficiency.
- Keep any further energy-related measures limited, temporary, and targeted to the most vulnerable, while preserving market incentives and containing fiscal costs.
- Maintain robust contingency planning.
- Structural reforms:
- Reduce regulatory barriers, mobilize private financing, support innovation and the green transition, and deepen the single market at the EU level.
- Strengthen labor market incentives, promote longer careers, support female participation, integrate migrants, and align skills development with AI and digital demands.
- Financial sector:
- Continue proactive supervision, deepen understanding of investment fund risks and financial sector linkages, and strengthen cyber preparedness.
IMF Communications Department, Press Release No. 26/255, July 22, 2026. The Executive Board completed the Article IV Consultation for France on July 17, 2026; the authorities have consented to publication of the Staff Report prepared for this consultation.