The Bank of France has cut its GDP growth forecasts to 0.9% for 2026 and 0.8% for 2027 due to surging energy prices from the Middle East conflict. This adjustment is based on a main scenario of temporary hydrocarbon price increases. The bank also expects inflation at 1.7% this year.
The Bank of France released its updated macroeconomic projections on Wednesday, affected by the Middle East conflict and the ongoing blockade of the Strait of Hormuz, which has pushed oil prices above $100 per barrel. In its main scenario, deemed the least pessimistic, GDP growth is now forecast at 0.9% for 2026, down from 1% in December. For 2027, it drops to 0.8%, from 1% previously. “Activity proved more resilient than expected at the end of 2025, and should remain so in the first quarter of 2026 based on the latest business surveys,” the central bank estimates. “But the rise in energy prices and the deterioration of the geopolitical context would then weigh on the French economy,” it adds. Inflation is expected at 1.7% in 2026 (after 0.9% in 2025), then 1.4% in 2027 amid easing energy prices. Growth would rebound to 1.2% in 2028, driven by exports and private domestic demand, with inflation at 1.6%. The Bank of France outlines two more adverse scenarios: an intermediate one with 2.5% inflation in 2026 and growth at 0.6% that year and 0.8% in 2027; the worst case sees 3.3% inflation and 0.3% growth in 2026, 0.4% in 2027. This follows Insee's downward revision on Tuesday for the first half of 2026 to 0.2% per quarter.
