Although artificial intelligence (AI) has been around for a long time, its widespread use in the world of work, particularly in the service sector, is a new phenomenon that raises many questions. Which sectors or professions will be affected? Which others will benefit? Will the expected productivity gains materialise? Observing trends in the United States, where it all began, already provides some answers.
Central Europe: Economic growth accelerated slightly to 2.3% for 2025 as a whole - Asia: In 2025, economic growth weathered the rise in US tariffs much better than expected - North Africa/Middle East: The economies of saw a rebound in growth in 2025 - Sub-Saharan Africa: The economic outlook for the region has been positively adjusted in recent months - Latin American: In 2025 these countries experienced slower growth
Artificial intelligence is emerging as a major driver of US economic growth. More specifically, expectations of sustained productivity gains and strong future profits are fueling the expansion.
When Donald Trump ran and won in 2024 on a campaign to “make America Great Again” by building a tariff wall around the US, very few voices rose to defend free trade, outside of international organisations whose creed it is to defend it. After “Liberation Day”, economic forecasters braced themselves for a global trade war. But nothing of the sort happened. Instead, 2025 ended up being an all-time record year for trade liberalisation measures. 2026 is not even two-month-old and has already seen several giga-trade deals signed, two of which by India, one of the countries with the highest tariffs in the world, and there are more signs that the tide is turning
Optimism surrounding the deployment of artificial intelligence (AI) has become a key driver of economic growth in the United States. But this is not without its drawbacks: the energy-intensive nature of AI is putting pressure on the electricity markets and pushing prices higher – a trend that is set to continue in 2026. This poses a challenge not only for the competitiveness of American businesses but also, due to the resulting inflationary pressures, for households. It also creates a political problem for the Trump administration as the midterm elections draw near, where the issue of affordability will take centre stage
Europe is getting better and better. It has not been spared shocks, notably the war in Ukraine – its impact on energy prices is largely responsible for German stagnation – and political uncertainty in France, which affected French GDP growth in 2025. But Europe is overcoming these difficulties. GDP Growth in the Eurozone proved robust, at 1.5%, and 2026 should be a positive year, even more than in 2025. Industry has emerged from recession, buoyed by defence, aeronautics and AI, while households are showing purchasing intentions not seen since February 2022. All these factors will help Europe to continue building its strategic autonomy. The context is favourable and Europe is becoming increasingly credible in the eyes of investors.
Business climate, households confidence, labour market, inflation in Q4 2025: our quarterly Pulse of the economic conjoncture
Growth is expected to have accelerated or at least remain steady across all regions in Q4. This is reflected in our nowcast for the Eurozone (+0.4% q/q) and the Atlanta Fed's GDPNow (+1.3%q/q). In France, after a very good figure in Q3, our nowcast suggests another strong performance (+0.3% q/q), as does our forecast for Spain (+0.7%). Our forecasts point to improving growth figures in the United Kingdom (0.2%), Italy (0.2%) and Japan (0.3%); the same goes for the figure published in China (+1.2% q/q).
March 4 will mark the first anniversary of Germany's announcement of its plans for massive investments in defense and infrastructure. The increase in public spending in Germany has already contributed to end the two-year recession (2023-2024) by 2025 – mainly through defense investments, according to our estimates. Infrastructure investments, on the other hand, are currently below the planned amounts. 2026, however, is expected to see a clear acceleration of these programmes, which should bolster a strong pickup in growth and restore Germany’s role as a driving force in the euro area.
GDP growth reached 0.5% q/q in the third quarter, well above the figures recorded for nearly three years. This outperformance came despite the period of political uncertainty that began in June 2024 and sluggish household consumption.
Between 2013 and 2018, India experienced robust productivity growth (increasing by a factor of 1.3, comparable to Vietnam, slightly lower than China, and higher than Indonesia, Malaysia, the Philippines and Thailand). However, from 2019 onwards, productivity in India has stagnated, while it has continued to rise in other countries (with the exception of the Philippines). This trend is particularly concerning given that GDP per capita remains low (in PPP, it was 2.4 times lower than that of China in 2024) and unemployment is high, especially among young people (15.6% in 2024 according to official data). Without a rapid increase in productivity, India could remain a ‘middle-income’ country.
Growth in emerging economies remained solid in 2025, driven by exports and supportive financial conditions. Global trade was stimulated by export front loading ahead of US tariff increases, as well as by the reconfiguration of trade flows and the boom in the tech sector. In 2026, growth in emerging economies is expected to remain resilient but become more moderate. Supportive factors are likely to fade and global trade is expected to slow down. Fiscal and monetary policies will continue to support domestic demand but will be more constrained than in 2025. Monetary easing will be more measured, and fiscal room for manoeuvre will be reduced by the need to curb the increase in public debt ratios.
The Eurozone labour market remains dynamic. The unemployment rate, at 6.3% in September, remains close to historic lows, while net job creation, although slowing in 2025, continued in Q3 (+0.1% q/q). According to Eurostat, the Eurozone has created almost seven million additional jobs since the end of 2019.
The Fed eased its monetary policy, with two expected announcements: the end of the central bank's balance sheet reduction process from 1st December; and a second straight cut (-25 bp) in the Fed Funds target, without unanimity, bringing it to +3.75% - +4.0%, due to downside risks in the labour market. We anticipate a further 25bp cut in December, driven by the Fed's bias towards employment and downward revisions to our inflation forecasts for the coming quarters. However, this easing cannot be taken for granted, as J. Powell insisted on keeping options open ahead of the upcoming meeting.
Low in fat, high in fibre, with a large proportion of fruit and vegetables: in terms of health, the virtues of the Mediterranean diet are well-established, but what about in economic terms? For the past decade, the countries of the Economic and Monetary Union (EMU) forming the Mediterranean ‘arc’ (France, Italy, Spain, Greece) have been following a similar diet, aiming to improve their competitiveness. We take a look at this in our Chart of the week.
The IFO business climate index fell in September to 87.7 from 88.9 in August (-1.2 points month-on-month, a monthly change close to the historical average monthly change of 1.1 points in absolute terms). This deterioration, after eight consecutive months of growth (84.8 in December 2024), particularly affected services. The situation in industry remained stable and more favourable than at the end of 2024, with a gain of around ten points for both current activity and the outlook.
As widely anticipated, the 16-17 September FOMC meeting ended with the Fed reducing its target rate by 25bp, while reasserting its independence. While the marked slowdown in payroll growth prompted the Fed to cut the policy rate for the first time in 2025, it reiterated that future decisions would remain data-dependent. In our view, the downside risks to the labour market cast little doubt about the continuation of monetary easing. We anticipate two further 25bp cuts in October and December, bringing the target range to +3.5% – +3.75%, which is in line with market expectations. However, easing is likely to remain limited in terms of both timing and scope, given the actual and expected rebound in inflation.
Artificial intelligence (AI) is a major technological upheaval with far-reaching economic implications. This economic literature review is both a practical exercise (it was written using generative artificial intelligence tools) and an analytical exercise, as it provides an update on the effects of this technology based on two complementary areas: productivity and growth, as well as employment and labour market dynamics.This literature review was written with the help of generative artificial intelligence tools, including OpenAI’s model on Azure and an internal BNP Paribas language model. The bibliographic references used for the review were independently selected and a detailed plan was drawn up to structure the content
Since the beginning of the year, China’s economic growth has proved to be more robust than expected. Exports have withstood US tariff attacks and household consumption has recovered thanks to government stimulus programs. However, large clouds are casting a shadow over the picture and are likely to slow growth in the second half of the year. On the one hand, trade tensions with the United States remain high and the tech war continues, even though Beijing and Washington have agreed to extend their truce until November. On the other hand, internal structural problems remain (real estate crisis, labour market fragility, low confidence in the private sector, deflation). Despite this gloomy backdrop, economic policy easing remains cautious
The August Employment Situation featured weak payroll growth and a rise in the unemployment rate. The release confirmed the downside risks surrounding the US labour market. The FOMC is expected to lower the Fed Funds Target Range (-25 bps) for the first time in 2025 at its 16-17 September meeting.
The number of corporate bankruptcies continued to rise in the first quarter of 2025. However, the momentum slowed, and the increase was uneven. Record highs were broken in the United Kingdom, where a slight decline was nevertheless observed. In contrast, the increase remains much more limited in Italy and Germany, where it continues. In France, the figures are high, but the increase has slowed. In terms of business sectors, services, trade, and construction are the most affected, but to varying degrees depending on the country. In contrast, industry appears to be relatively unscathed. An analysis of bank balance sheets, particularly in France, puts the impact of bankruptcies into perspective
Outside the US, GDP growth in the first quarter generally exceeded expectations in the European Union, the UK, and emerging economies, including China. After the surge in imports that preceded the US tariff hike, the backlash in the second quarter will be more limited than expected in most cases. However, it would be premature to sound the all-clear, as three dangers loom: tariffs, inflation, and public debt.
Key figures for the French economy compared with those of the main European countries, analysis of data on the population and the French labour market, activity by sector, publication administration figures, inflation, credit and interest rates, corporate and household accounts.
The first half of 2025 was marked by two major turning points: the outbreak of a global trade war by the United States and, on the European side, announcements regarding rearmament efforts and the German investment plan, supporting the Old Continent's economic revival. The second half of the year will be marked by the aftermath of these announcements and is likely to be as hectic as the first, given the continuing uncertainty surrounding the outcome of the tariffs. The uncertainty surrounding the extent of their inflationary impact in the US and the duration of the Fed's monetary policy status quo is also significant. The risk of a derailment caused by fiscal policy remains
