France's economy is projected to experience slow growth throughout 2025, as subdued manufacturing activity and tighter public spending continue to hinder output, according to a forecast released on Wednesday by the national statistics agency INSEE.

The agency expects the eurozone's second-largest economy to sustain a quarterly growth rate of 0.2% from the second quarter onward for the remainder of the year.

Manufacturing output is expected to stagnate through the end of the year due to weak production outlooks and a lacklustre order pipeline.

Consumer spending will offer only limited support, with a temporary boost in the summer pushing quarterly growth to 0.4%, before easing to 0.3% in the fourth quarter.

Overall, the economy is forecast to grow by 0.6% in 2025, a slowdown from last year's 1.1%, as modest gains in consumer spending and business inventory restocking only partially compensate for sluggish foreign trade, Reuters news agency reports.

This projected growth of 0.6% falls slightly short of the government's 0.7% forecast, potentially making it more difficult to meet its goal of limiting the budget deficit to 5.4% of GDP.

Furthermore, inflation is expected to remain subdued, averaging just 1% for the year, and even lower at 0.8% under the EU-harmonised index, driven by falling energy prices and intensified competition among telecom providers.

Household consumption, historically the main engine of French growth, is projected to increase by 0.7% in 2025, in line with gains in purchasing power, while the savings rate is expected to remain elevated at 18.2%.

Moreover, overall, domestic demand is set to contribute 0.5 percentage points to economic growth this year, down from 0.6 points in 2024.

In contrast, external trade is forecast to weigh on growth, subtracting 0.7 points, after having contributed a positive 1.3 points last year.