The IMF's growth forecast for France was unchanged from its most recent World Economic Outlook report, issued in September, and was slightly lower than French government projections for 2 percent to 2.5 percent growth in 2006.
In Monday's report, the global lender said high energy prices would boost French consumer prices to 2.1 percent in 2005, and warned economic weakness among trade partners and demographic shifts could dampen economic prospects.
"Export growth could remain sluggish, underscoring the importance of structural reforms to contain labour costs, and preserve competitiveness," the fund said in an annual health check of the French economy, known as an Article IV review.
Without economic reforms, the IMF estimated that France's economy would grow 1.9 percent per year in the medium term. It said expensive energy costs needed continued attention.
"It will be important to avoid second-round effects from high oil prices on wages," it said, praising French authorities for providing some assistance to low-income people affected by the oil price surge while keeping a tight budget.
The IMF backed tax reforms planned by France and said the country needed more ambitious spending controls to achieve its fiscal goals, adding the objective of reducing the deficit to 3 percent of gross domestic product "was now within reach despite slow growth."
Still, the fund said reducing the targeted deficit to 2.9 percent of GDP in 2006 would require growth at the high end of forecasts and added social security contributions. It urged the government to "consider additional measures" to help cut the underlying deficit by 0.5 percentage point of GDP next year.
Noting World Trade Organisation talks on farm subsidies are "at a critical stage," the fund urged France to "show the flexibility necessary to contribute to a successful conclusion of the Doha round."
"Particularly important will be achieving greater liberalisation of the agriculture sector, which would benefit consumers as well as the international community," it said, without adding other details.