Growth: IMF Cuts France to 0.4% and Upgrades All Its Neighbors

<< Forecasts are difficult, especially when they concern the future. >> This quip, attributed to Pierre Dac as well as Niels Bohr, fits the report card of the day. For this Tuesday, the International Monetary Fund (IMF) cuts France's growth forecast. It drops to 0.4% in 2026 and 0.7% in 2027. Each year loses 0.2 points compared to July. In contrast, Germany, Spain, and Italy are upgraded. Thus, France is the only one to decline, on the very day a budget already filled with crypto amendments arrives in the assembly.

Key points of this article:

• The IMF lowers French growth to 0.4% in 2026 and 0.7% in 2027, while Germany, Spain, and Italy are upgraded.
• Bercy still aims for 1% in 2027, and the targeted deficit of 5% of GDP could slide to 5.2 or 5.3%.
• AI drives global growth to 3.1%. However, the IMF fears a 20% drop in U.S. stocks if its promises are delayed.

French Growth: IMF Cuts to 0.4%

The figures come from the World Economic Outlook published this Tuesday, October 13. The report arrives during the annual assembly of the IMF and the World Bank in Bangkok.

The contrast is striking. The eurozone is upgraded to 1.1% in 2026 (+0.2 points). Berlin gains 0.6 points, reaching 1.3%. Madrid shoots up to 2.5%, and even Rome rises to 0.8%. With 0.4% growth according to the IMF, France shows the slowest pace among the four major economies. It thus lags 0.7 points behind the average of the monetary union.

According to AFP, the IMF first blames the whims of summer, between heatwaves and fires. It also points to a political uncertainty that clings to the country. Add to that expensive energy. The war in the Middle East keeps prices under pressure. The Fund does not see the Strait of Hormuz reopening before March 2027.

Budget 2027: Bercy Bets on 1% Growth

Bercy, however, sees bigger. The finance bill projects 1% growth in 2027. The IMF only forecasts 0.7% growth for France, while the Bank of France predicts 0.9%. The High Council of Public Finances (HCFP) had already raised an eyebrow. In its opinion on October 1, the budget watchdog deemed this scenario "optimistic" and the downward risks predominant.

The stakes go beyond a mere dispute over decimal points. The government aims for a public deficit of 5% of GDP in 2027, after 5.4% expected this year. However, less growth means less tax revenue. The IMF had also scolded Paris about its record debt last week. Before the Senate, HCFP President Amélie de Montchalin quantified the bill. With the assumptions of other forecasters, the deficit would then slide towards 5.2 or 5.3%.

Markets have already done their math. This Tuesday morning, the 10-year OAT (the benchmark bond of the French state) yielded 4.89%, compared to 3.48% for its German equivalent. This 141 basis points spread measures the premium that investors demand to lend to Paris rather than Berlin.

AI Drives the World While France Misses the Train

Globally, the IMF raises its forecast to 3.1% for 2026 and maintains 3.4% for 2027. The fuel has a name: artificial intelligence. Tech giants are expected to pour $660 to $690 billion into it this year. South Korea is already reaping the rewards, upgraded to 3.3% thanks to its chip exports.

However, the flip side is clearly stated in the report. If AI productivity gains are delayed, the IMF envisions a 20% drop in U.S. stocks. Global GDP would then be cut by 1.1% by 2028. Global inflation remains perched at 4.7% in 2026, with a 35% probability of exceeding 5% next year. A bad omen for Bitcoin, which has been glued to Wall Street for months. Because when the Nasdaq sneezes, the crypto market rarely catches just a cold.

Not well connected to the AI value chain, France only picks up crumbs from this technological dividend. Instead, it receives the full energy bill. Tonight, deputies will examine the motion to reject the budget. Its revenue part has already been rejected in committee with five crypto amendments adopted.

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