French finance ministry trims growth outlook, hikes inflation estimate

PARIS, April 14 (Reuters) - ‌France's Finance ​Ministry ​trimmed its 2026 growth forecast slightly on Tuesday and hiked its inflation ‌estimate to reflect the fallout from the ⁠conflict in the Middle East.

The euro zone's second ‌biggest economy is now ‌expected to grow 0.9% this year instead of the 1.0% expected previously while inflation ​is projected to average 1.9% instead of 1.3%, mainly due to higher energy import ⁠prices, the ministry said.

Finance Minister Roland Lescure said the current ​crisis would have a "modest impact" on growth, citing momentum carried over from last ​year, while inflationary effects ‌would be "limited" thanks to France's heavy reliance on nuclear power.

The ministry said ⁠its projections assume oil prices will remain at $100 a barrel until the end of May before ⁠gradually easing.

Despite a less favourable economic outlook, the government ​reiterated its commitment to cutting the public sector budget deficit to 3% of output by 2029, from ‌5.1% in 2025.

However, a surge in global bond yields since the conflict ‌erupted has increased borrowing costs, adding an ⁠estimated 4 billion euros ‌to government ​financing expenses this year, the ministry said.

(Reporting by Leigh Thomas, Editing by William ‌Maclean)

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