French central bank nudges up first quarter growth forecast to 0.2%

PARIS (Reuters) - France's economy fared marginally better than expected in the first quarter but business in the industrial sector is set to ease in the face of new U.S. tariffs, the central bank said on Tuesday in its monthly economic outlook.

The euro zone's second-biggest economy likely grew 0.2% in the first three months of the year from the previous quarter, when it contracted 0.1%, the central bank said, revising up its estimate from 0.1-0.2% previously.

Growth would be driven by a slight pick-up in services and industrial activity after a slowdown at the end of 2024 in the wake of the summer Olympic Games, which had created a temporary burst of business activity, the Bank of France said.

In March, activity picked up slightly in the services and industrial sectors with the luxury industry seeing an upturn ahead of U.S. tariff announcements, according to the central bank's monthly business sentiment survey of 8,500 firms.

Although the survey was conducted mostly ahead of the Trump administration's "reciprocal" tariff announcements last week, firms reported that visibility for business conditions in the months ahead was poor due to the trade tensions, the central bank said.

Industrial companies in particular reported concerns about the impact of the tariffs hitting their order books, which are already below long-term averages in most sectors other than aerospace.

(Reporting by Leigh Thomas)

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