Based in Paris, BNP Paribas' Economic Research Department is composed of economists and statisticians:
The Economic Research department’s mission is to cater to the economic research needs of the clients, business lines and functions of BNP Paribas. Our team of economists and statisticians covers a large number of advanced, developing and emerging countries, the real economy, financial markets and banking. As we foster the sharing of our research output with anyone who is interested in the economic situation or who needs insight into specific economic issues, this website presents our analysis, videos and podcasts.
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Business creations rose by 12% y/y over the first eight months of 2026. This is significantly higher than the 5.3% y/y growth recorded in 2025. This increase was driven by sectors linked to information and communication technologies.
Eco Charts | Business creations and bankruptcies is a new publication aimed at providing an overview of the dynamics of business creations and bankruptcies in France, as well as the risks associated with the latter. We will publish regular updates to this publication on a quarterly basis.
Since June 2026, the ECB has been publishing a new indicator that helps to assess the transmission of its monetary policy to the economy: the Broad Intermediation Gauge (ECB-BIG). This new tool has revealed that, thus far, strong credit growth has limited the restrictive impact of tightening financial conditions caused by rising interest rates in the Eurozone. However, this offsetting effect is beginning to fade.
Growth was stronger than expected in Q2 and is set to strengthen further in the coming quarters. According to our forecasts, it will reach 1.5% in 2027 after 1.1% in 2026. This growth is expected to be driven by investment and its knock-on effect on exports. On an annual average basis, inflation is expected to stand at 3% in 2026 and 2.8% in 2027, peaking at the end of 2026. The ECB is expected to continue its monetary tightening. At this stage, a single further rate rise, aimed at keeping inflation expectations anchored, is expected in December. The impact of rising interest rates (key policy rates and market rates) on public finances and private sector borrowing conditions will be worth monitoring.
French economic growth will underperform in 2026, partly due to a number of exceptional setbacks. In 2027, it is expected to rebound to 1% (compared with 0.5% in 2026), supported by rising external demand (particularly from Europe). So far, businesses and households appear to be weathering the rise in inflation relatively well, although it is expected to continue (we are forecasting 2.3% inflation in 2027, following 2.4% in 2026). Fiscal consolidation remains challenging, complicated by the weak growth seen in 2026, and is expected to be implemented gradually. As a result, public debt is expected to rise, with a moderate upside risk due to the rise in sovereign-bond yields.
As we begin the 2026 financial year, long-term sovereign bond yields are reaching unprecedented highs not seen for decades. Why is this happening? Is it sustainable? What are the implications for the world’s various economies? These are just some of the questions addressed in this new Special Edition video, introduced by Chief Economist Isabelle Mateos y Lago.Drawing on insights from the banking sector and teams specialising in emerging and advanced economies, the economists from Economic Research will explain why the rise in bond yields is problematic.
Against the backdrop of rising bond yields in the Eurozone, Thomas Humblot, economist in the banking economics team, analyses the implications for the cost of bank financing and for borrowers, whether individuals or businesses.
In June 2026, corporate creations cumulated over one year remained dynamic, reaching a historic peak according to INSEE, with 1,233,123 corporates set up, representing a 11.1% year-on-year increase. This momentum is not a recent phenomenon, as corporate creations have doubled over the last decade. During this same period, the rise in bankruptcies has been ten times lower, which serves to put current levels (approximately 70,000 bankruptcies cumulated over one year in March 2026) into perspective. Historically, the peaks and troughs in corporate bankruptcies are following those of corporate creations, with an average lag of 24 to 36 months
According to our forecasts, the impact of the conflict in the Middle East is likely to restrict GDP growth to 1.0% in 2026 and 1.3% in 2027 (down from 1.6% for both years prior to the conflict). Private consumption will be hit by falling real wages (with inflation projected at 3.0% in 2026 and 3.3% in 2027, compared to initial estimates of 1.9% and 2.3%). However, the high savings rate will enable households to mitigate the impact over time. Economic activity could suffer from less favourable interest rate dynamics (we anticipate a 50bp increase in ECB rates in 2026). However, the ongoing investment in defence, AI and electrification is expected to continue and boost intra-EU trade. The expected deterioration in public finances in 2026 will be significantly less severe than in 2022.
Since rebounding in Q2 2025, French growth has been relatively robust. Things are not expected to have changed in Q1 2026, with growth supported in particular by precautionary spending. In Q2, higher inflation (and thus lower purchasing power) should weigh on household consumption, whilst support from public finances is expected to be more moderate than in 2022. However, French growth is expected to remain resilient, driven in particular by public investment (both French and European) in defence and private investment in AI. Overall, we are revising our growth forecasts to 1% in 2026 (-0.3 pp) and 1.1% in 2027 (-0.2 pp); and our inflation forecasts to 2.4% in 2026 (+1.3 pp) and 1.9% in 2027 (+0.4 pp)
Activity indices are holding up, but household confidence is eroding. Business sentiment indicators did not falter in March, and prospects of price rises are confined to a few sectors (oil and chemicals). The downturn is, at this stage, less pronounced in services and construction. Household confidence is deteriorating more noticeably against a backdrop of significantly rising inflation expectations and gloomier prospects for economic activity and unemployment.
The energy shock has mainly resulted in precautionary behaviour on the part of firms, which increased their inventories in March. This reflects the sharp rise in input costs (which are still below their 2022 levels, however). In the short term, the build-up of corporate inventories (prior to the acceleration in inflation) has supported production. The rise in energy prices does not appear, at this stage, to have affected household spending behaviour.
The impact of the energy price shock has been limited so far. Expected price indices rebounded only slightly in March, across all sectors (a very different situation to 2022). For the time being, this shock does not involve any major supply constraints. Output is likely to be more severely affected by falling demand as the issue of purchasing power resurfaces. Although this is a concern for households, they have not yet scaled back their spending intentions.
Business sentiment remains solid for the time being, despite the energy shock. Above all, companies are reporting, above all, a rise in input costs, which is expected to lead to higher prices for goods sold in the coming months. Output remains buoyant, in both industry and services. However, household confidence is deteriorating significantly, driven by sharply rising inflation expectations.
During her hearing on 18 March 2026 before the Committee on Economic and Monetary Affairs of the European Parliament, Claudia Buch (Chair of the Supervisory Board of the European Central Bank) highlighted the absence of decline in the quality of bank assets and the stability of non-performing loan ratios. These ratios are a good indirect indicator of the financial health of borrowing corporations in the European Union (EU), particularly in the manufacturing sector. When viewed from this perspective, the proportion of firms in this sector facing severe financial difficulties appears to be lower at the start of 2026 than at the start of 2022. This suggests, by extension, that these firms are in better financial health and have a greater ability to absorb shocks
According to the ECB's Bank Lending Survey (BLS), some banks in the Eurozone may tighten their credit standards for households more significantly in 2026 than in 2025. The reason for this is the more constraining calculation of regulatory capital requirements. In contrast, the tightening would be less severe for corporations. This desynchronisation is unusual. It tends to illustrate the effect of the ramp-up of the output floor, which would particularly affect housing loans. However, the effect would remain very limited: only one in ten banks is considering to change its standards. New loans to households and corporations would keep their momentum largely unchanged.
In the Eurozone, the improvement in the business climate points to stronger activity. Household confidence remains moderate but spending intentions are rebounding. The unemployment rate is close to its low point, and inflation remains under control.
Lending rates are relative stable since September. Bank financing flows to Eurozone corporations are expanding faster than market financing flows. In France, outstanding loans continue to recover overall.
The business climate initially improved in industry (driven by the rebound in aeronautics production) and is now improving in services as well, particularly business services. Household confidence continues to improve, albeit moderately. The labour market remains resilient.
Since 1 January 2025, banks in the European Union have had to consider the loan-to-value (LTV) ratio of loans to households for house purchases when calculating their regulatory capital. This new prudential requirement is ill-suited to the French market. The criteria for granting home loans are based mainly on the debt service-to-income ratio, leading to historically low default rates. However, since mid-2025, the supervisor has been paying increasing attention to the LTV of home loans in France, which is fuelling concerns about higher borrowing costs and an increase in down payment rates.
Growth in the Eurozone is expected to strengthen in 2026 (1.6%) primarily driven by investment and a resurgence in activity in Germany. Our forecasts indicate that inflation is likely to remain below the 2% target. However, the anticipated recovery in GDP growth may prompt the ECB to keep its rates unchanged until 2027 before raising them. The fiscal impulse is expected to remain largely neutral, as fiscal consolidation in France and Italy offsets the increase in the German deficit. Interest rates on new loans to households and businesses are projected to remain stable in 2026, with new loans continuing to decelerate for both households and businesses. However, sovereign rates are expected to rise moderately.
French growth has been rebounding since Q2 2025, driven primarily by aeronautics production, but also by business investment in a context of decreasing interest rates. These two factors are coming along with two structural drivers: growth in services and public consumption. In 2026, these momentums are expected to continue. Additionally, exports should benefit from the rebound in German growth. Inflation is expected to remain low and household consumption to strengthen moderately, against a backdrop of continued high political uncertainty. French GDP growth is expected to return to its 2024 level (1.1%) in 2026, after a soft patch in 2025 (0.8%).
Since 2020, households’ real estate purchasing capacity has improved significantly in the tightest housing markets. Our metric, which monitors changes in the amount of space a typical household can purchase, has increased by almost 20% in areas where demand for housing significantly outstrips supply. In contrast, in less constrained or even unconstrained areas, purchasing capacity decreased during the same period.
In August 2025, the decrease in market rates (Euribor, swap, etc.), which began in October 2023, had been passed on in full to the rates on new bank loans to corporations and households in the Eurozone. Banks generally tend to adjust the pricing of new loans to the cost of their resources with comparable maturities. Swap rates are good reference rates in this respect, as they provide a reliable approximation of what the market considers to be the expected path of short-term rates for a wide range of horizons.
The recovery in PMI indices continues despite a decline in industry. In September 2025, the composite PMI reached its highest level since May 2024 (51.2), an improvement attributable to services (51.4). However, the manufacturing index, which had been recovering sharply since the beginning of the year, declined in September (-1.2 points to 49.5). Industrial production rose by 0.3% m/m in July. The economic sentiment index stabilised in Q3.
