Recently, the NY Times reported (here) that "...after three government upheavals in France since last summer, the damage to the French economy has already been done." In this post, I will take a look at the data. Recent data on French GDP comes from the World Bank and ends in 2024. The graphic above shows French Real GDP (GDP in constant 2015 US$) with a forecast and 98% confidence intervals out to 2100.
French GDP is forecast to grow until about 2045 and then collapse after that.
In terms of "damage to the French economy," the 2020 COVID-19 Pandemic was a major shock (outside the lower 98% confidence interval). In 2024, French GDP was a bit above the forecast attractor path (dashed red line). Political turmoil might reasonably be expected to bring the economy back to the attractor path but not create another COVID-style shock.
Possibly the most concerning aspect of the GDP forecast is the collapse starting around 2045. Why is the French Economy forecast to be in Growth-and-Collapse mode?
If you have been following my prior postings on the French Economy (here) you will see that France is approaching a Steady State Economy (maybe).*** French GDP, on the other hand, is best predicted by the World System (see the Notes below), which is in growth-and-collapse mode (see the WL203 Model). To avoid this future, some geopolitical re-orientation** will be needed.
Looking at the AIC statistics (below). One approach would be to reorient the French Economy to Business as Usual (BAU, [16.16 < AIC = 21.38 < 25.79]) with no external geopolitical alignments, which produces the steady-state forecast above. Compared to the World System model (W, [-97.78 < AIC = -46.24 < -9.145]) which has the best AIC, this will require some geopolitical work. One path would be through the Random Walk (RW, [ -67.1 < AIC = -56.52 < -47.09]) which has a very good AIC but is not predictive of the future.
One charitable analysis of current French Political Instability is that it is part of a Random Walk walk process to find a different Geopolitical Alignment. There is no guarantee that the process will end in a Steady State Economy.
You can experiment with the FRL20 BAU model here and explore alternative futures.
Notes
** The New York Times also reports (here) that France's ability as a geopolitical actor has been compromised by the current Political Instability.
*** The issue surrounding unending (exponential, unstable) Economic Growth, Limits to Growth, Steady State Economies, and Growth-and-Collapse Modes have been uncovered (again--the debate has been ongoing since the 1970s) in the 2025 Nobel Prize for Economics. Joel Mokyr, a historian and one of the recipients, argues (here) that a Steady State Economy where growth has ended is unlikely. If history is any guide, new innovations will always break the Steady State and create more opportunities for growth. However, see my discussion of French Technology Cycles here and here. Also see Joseph Schumpeter's Creative Destruction model (here). I will review all these models in a future post, but as an obvious summary: no one knows the future. I can only report on forecasts from models and wait to see what happens to the actual French Economy.
AIC Statistics
Technology Models
The Nobel Price in Economics was recently award to Phillipe Aghion, Peter Howitt and Joel Mokyr for their work on How Technology Drives Economic Growth. Reviewers have claimed that their work has relevance for current Growth Policy. For this post, I can just point out that the two technology input models, TECHE (TECH Efficiency) and TECHP (Tech Productivity) are reasonable competitors but not the best models.
I will investigate La French TECH in a future post (here).
