France's economy performed slightly better than anticipated in the first quarter, according to the central bank's monthly economic outlook released on Tuesday.

However, industrial activity is expected to slow due to the impact of new US tariffs.

The central bank now estimates that the eurozone’s second-largest economy grew by 0.2% in the first three months of the year, an upward revision from its earlier forecast range of 0.1% to 0.2%, following a 0.1% contraction in the previous quarter.

The Bank of France stated that economic growth is expected to be supported by a modest rebound in services and industrial activity, following a slowdown at the end of 2024 after the temporary boost from the summer Olympic Games, Reuters news agency reports.

According to its monthly business sentiment survey covering 8,500 firms, both sectors saw a slight improvement in March.

However, while the survey was largely conducted before last week's announcement of the Trump administration's “reciprocal” tariffs, firms indicated that business outlooks for the coming months were uncertain due to ongoing trade tensions, according to the central bank.

Indeed, the uncertainty indicator rose across all sectors. Industrial companies, in particular, expressed concerns about the tariffs affecting their order books, which are already below long-term averages in most sectors, with the exception of aerospace.

That said, the country’s manufacturing sector exceeded expectations in March, and there were indications that some industries, such as luxury goods and alcoholic beverages, had accelerated deliveries to the US in anticipation of higher trade tariffs, according to the Bank of France.

While the improvement in the economic outlook offers a slight positive amid growing downside risks, the government has already indicated it will revise this year’s growth forecasts downward, as tariffs are expected to negatively impact the entire European Union, Bloomberg reports.

“I must insist this is a snapshot of the first quarter and doesn’t predict what will happen in the second,” Bank of France economist Olivier Garnier commented.