The French economy may have experienced a boost from the Paris Olympics in Q3, according to the Bank of France.

However, ongoing political uncertainty continues to exert pressure on its stock markets.

As the Paris Olympics concluded on Sunday, France's economy seems to have benefited from the surge in visitors and increased spending in areas like hotels, restaurants, and museums, according to Tourism Minister, Olivia Grégoire.

Indeed, spending on hotels in cities hosting Olympic events increased by 16% compared to the year before, while tourism-related sales at museums and restaurants saw a 25% year-on-year rise, Grégoire told French newspaper La Tribune Dimanche.

Various institutional surveys indicate that the Paris Olympics are expected to greatly strengthen the French economy in Q3, mitigating the impact of the political uncertainties that surfaced in late June, Euro News reports.

The Banque de France forecasts economic growth of between 0.35% and 0.45% for the third quarter, compared to a 0.3% increase in Q1 and Q2. 

This implies that as much as 0.25% of the growth could be attributed to the Olympics, with the economic boost primarily driven by ticket sales and TV rights.

Last month, national statistics institute, INSEE forecast the Olympics would contribute 0.3% to the country’s economy in the third quarter, which could bring overall growth to 0.5%.

Moreover, Visa data revealed that consumer spending grew by over 20% during the Olympics' first weekend compared to the previous year, with spending related to foreign visitors soaring by 29%.

Nevertheless, the overall impact of these gains remains unclear due to persistent political challenges. “It's still too early to see how this uncertainty will impact hiring and investment decisions,” said Banque de France's Chief Economist, Olivier Garnier, in reference to the deteriorating political position of Prime Minister Emmanuel Macron.

In response to the unexpected rise of the French far-right party, Macron called for a legislative election. However, the results were detrimental to his centrist party, as no party achieved an absolute majority to form a government, resulting in a hung parliament.

This outcome could potentially hinder Macron's pro-growth policies, even though he successfully secured a €14.6 billion foreign investment pledge at the “Choose France” summit in May.

However, the Paris Olympics might prevent a decline in business confidence, as the event has overshadowed the political turmoil. 

According to the Banque de France, business uncertainty in Q3 has declined to its lowest level since the end of 2023, following a surge caused by the snap election.