The OECD sharply lowers its growth forecast for France and Germany in 2025

The Organization for Economic Cooperation and Development (OECD) revised its growth forecast for Germany and France in 2025 sharply lower on Wednesday. In a political crisis, Paris and Berlin should record 0.9% and 0.7% respectively. % growth for 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. Certain risks lie in wait. In addition to a risk of soaring energy prices due to conflicts in the Middle East, « a revival of protectionism, particularly on the part of major economies, constitutes another major risk of deterioration compared to forecasts »writes the OECD two months before the inauguration of Donald Trump.

For France, struggling with growing political uncertainty for weeks which risks leading to the fall of the government on Wednesday but on which the OECD does not comment, « the fiscal consolidation efforts that 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 ».

German exports struggling

Among the good news, however, « for the second consecutive year, external demand is the main driver of growth in 2024 » et « domestic demand, which benefited from temporary support from private consumption in the third quarter of 2024 due to Olympic Games, expected to recover from 2025, and accelerate as disinflation boosts purchasing power ».

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. Its exports are undermined by a drop in demand in China and other Asian countries.

Finance infrastructure

« Private investment will gradually recover, supported by the scale of corporate savings and the slow decline in interest rates, but policy uncertainty 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 »also estimates the OECD in its report.

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In the Financial Times, Bundesbank President Joachim Nagel calls this Wednesday to « a relaxation of the debt brake » to increase investments. The OECD also recommends strengthening the efficiency of public spending, improving tax collection and relaxing budgetary rules to finance infrastructure, the green transition and digital technology.