According to the international institution, “the budgetary consolidation efforts which will be deployed in 2025 and 2026 will weigh on growth and will partly neutralize the positive effect of the easing of monetary policy on residential and business investment” .
The Organization for Economic Co-operation and Development (OECD) revised its growth forecast for Germany and France in 2025 sharply lower on Wednesday, while raising that for global growth thanks to American dynamism. In a political crisis, Paris and Berlin should respectively record 0.9% and 0.7% growth in their GDP next year, a decline of 0.3 points compared to the latest forecasts published by the international institution in September. .
This will not prevent global growth from showing at 3.3% in 2025, up 0.1 point thanks to a jump in American growth, writes the Parisian institution in a report published Wednesday.
External demand remains the main driver of French growth
For France, struggling with growing political uncertainty for weeks which risks leading to the fall of the government on Wednesday, but concerning which the OECD does not comment, “the budgetary consolidation efforts which will be deployed in 2025 and 2026 will weigh on growth and will partly neutralize the positive effect of the easing of monetary policy on residential and business investment.
Among the good news, however, “for the second consecutive year, external demand is the main driver of growth in 2024” and “domestic demand, which benefited from temporary support from private consumption in the third quarter of 2024 due to the Olympics, is expected to recover from 2025, and accelerate as disinflation boosts purchasing power.
Zero growth for Germany in 2024
For its part, Germany has been struggling for two years to recover from the energy crisis triggered by the Russian invasion of Ukraine, which has left its mark on its industry: after suffering a recession last year, Berlin is expected to experience a zero growth this year before restarting modestly in 2025, according to the OECD.
“Private investment will gradually recover, supported by the scale of corporate savings and the slow fall in interest rates, but uncertainty linked to public action will continue to weigh on investor confidence,” writes the international economic institution less than three months before crucial elections for the country.
“Exports will gradually recover, as demand from Germany's main trading partners strengthens,” the OECD also estimates in its report.
