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Investing.com - French industrial production fell in May 2025, continuing a trend of economic underperformance compared to other eurozone countries. Manufacturing output declined by 1.0% month-on-month, following a revised 0.7% drop in April, while total industrial production decreased by 0.5% after contracting 1.4% in the previous month.
Most industrial sectors experienced declines in May, with only transport equipment and electricity production showing positive results. Construction output also fell by 0.5% for the second consecutive month, with activity down 3.8% year-on-year over the last three months. Manufacturing output is now 0.4% lower over the past three months compared to the same period in 2024.
Business sentiment in the industrial sector weakened further in June, with no meaningful recovery signals on the horizon. Several factors are hampering growth prospects, including trade uncertainty ahead of potential US tariffs on European goods, euro appreciation of 5% in nominal effective terms since the start of the year, ongoing geopolitical tensions, and domestic fiscal uncertainty.
ING now expects French GDP to contract by 0.1% quarter-on-quarter in the second quarter of 2025. The financial services firm forecasts full-year GDP growth of just 0.4% in 2025, down from 1.1% in 2024, with only a modest recovery to 0.8% in 2026.
The French economy faces a challenging environment with little sign of improvement ahead, as the country enters a difficult budget negotiation phase where significant fiscal adjustment appears inevitable, potentially involving tax hikes affecting both households and businesses.
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