IMF revises growth forecasts for France and Germany

The International Monetary Fund (IMF) has revised its growth forecasts for the economies of France and Germany, predicting a slower expansion than previously expected. This adjustment is anticipated to have a significant impact on the overall performance of the eurozone.

According to the latest World Economic Outlook report by the IMF, both France and Germany are projected to experience lower growth rates due to various factors such as high interest rates and weak consumer sentiment. France's growth is expected to decelerate to 0.7 percent this year, down from 0.9 percent in 2023, while Germany is forecasted to achieve a modest recovery of 0.2 percent following a 0.3 percent contraction last year.

The IMF highlighted that the eurozone as a whole is predicted to see growth accelerate to 0.8 percent in 2024, up from 0.4 percent in the previous year. However, this growth is described as starting from very low levels due to tight monetary policies, past energy costs, and planned fiscal consolidation.

The report also mentions that stronger household consumption, driven by a decrease in energy prices and inflation, is expected to fuel the recovery in the eurozone. Despite these projections, both France and Germany are forecasted to underperform the overall eurozone in 2025, with growth rates of 1.4 percent and 1.3 percent, respectively.

The IMF's outlook for the eurozone's growth is influenced by various factors, including the impact of geopolitical tensions, rising energy costs, and the transition to a green economy. The European Central Bank's decision to potentially reduce interest rates is seen as a key driver for the anticipated growth in the region.

In conclusion, the IMF's revised forecasts indicate a challenging economic landscape for France and Germany, with uncertainties surrounding global events and internal economic factors shaping the future growth prospects of the eurozone.