1. France: Growth Outlook Adjusted Upward for 2025
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On September 11, 2025, the National Institute of Statistics and Economic Studies (INSEE) released its updated growth forecast for the French economy, projecting GDP growth of 0.8% for 2025, up from the previous estimate of 0.6%.
Quarterly Growth Trends:
INSEE expects the French economy to expand by 0.3% in Q3 and 0.2% in Q4. However, it warned that political uncertainty, following the government reshuffle in early September, could pose downside risks to the outlook.
Sectors driving growth include aerospace, tourism, agriculture, and real estate, while household consumption and business investment remain weak.
Inflation Declines to Record Low Levels
INSEE data showed a significant decline in the Harmonised Index of Consumer Prices (HICP) during 2025.
Inflation fell to 0.8% in August 2025, one of the lowest levels in the euro area, driven by lower energy prices and price control policies in certain public services.
The Bank of France, in its September 2025 economic report, projected average annual inflation of around 1.0% for 2025.
The bank noted that the reduction in inflation was mainly due to lower electricity costs, emphasizing that future monetary policy in the euro area would depend closely on wage developments and core inflation trends.
Labor Market and Business Sentiment
According to INSEE, the unemployment rate stood at 7.5% in Q2 2025, showing little change compared with earlier in the year.
Meanwhile, the Business Climate Index remained at 96 in September, below the long-term average of 100, indicating ongoing business pessimism regarding short-term production and consumption prospects.
2. Portugal: Sustained Recovery Momentum
According to CaixaBank Research (September 9, 2025), Portugal’s economy continued its recovery throughout 2025.
In Q2 2025, GDP grew by 0.6% quarter-on-quarter, offsetting a 0.4% contraction in Q1.
This recovery was driven mainly by domestic consumption and investment, especially in the services and constructionsectors.
Annual Growth Forecast:
Portugal’s GDP is expected to grow by 2.4% in 2025, surpassing the euro area average, reflecting robust economic resilience.
Labor and Inflation:
The labor market remained strong, with low unemployment and real wages increasing by 3.7% in Q2 2025.
Inflation moderated to 2.3%, supported by stable energy and service prices.
Investment and Trade:
Investment, particularly in construction and infrastructure, continued to be a key driver of growth, while exportsstruggled due to weak global demand and trade barriers, especially from the United States, which negatively affected Portugal’s trade balance.
Medium-Term Outlook:
CaixaBank Research projects GDP growth to ease to 2.1% in 2026 and 1.7% in 2027, as the EU Recovery and Resilience Plan (RRP) phases out.
Nevertheless, domestic consumption and investment are expected to sustain overall stability.
3. France’s Trade Situation
In July 2025, France’s trade balance improved by EUR 0.2 billion, narrowing the deficit to EUR –6.5 billion.
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Imports: EUR 57.7 billion (+0.3 billion)
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Exports: EUR 51.2 billion (+0.5 billion)
The energy balance improved by EUR 0.3 billion, driven by higher exports and lower imports.
In contrast, the non-energy balance slightly deteriorated by EUR 0.1 billion.
Manufactured Goods:
The manufacturing balance declined by EUR 0.2 billion — while investment and intermediate goods remained stable, the consumer goods balance worsened by EUR 0.2 billion.