French economy shrank by 0.1% in first quarter
Overview of France's Economic Performance in Early 2026
First Quarter GDP Figures
May 29 (Reuters) - France's economy shrank slightly in the first quarter, final data from statistics office INSEE showed on Friday, missing the preliminary reading of 0.0% for the euro zone's second-largest economy.
The statistics office reported a result of -0.1%, below the average forecast of 0.0% in a Reuters poll of 19 economists.
Key Economic Drivers and Sectors
Exports and Trade Performance
Exports dropped 3.5% after a 0.9% rise in the previous quarter, weighed down by a decline in aeronautical exports, the statistics office said.
Household Consumption Trends
Household consumption, the traditional driver of French growth, dropped 0.2% after a 0.3% increase in the fourth quarter of 2025, hit by a drop in energy consumption.
External Factors Impacting Growth
International Trade Disputes and Geopolitical Tensions
Tariff Dispute with the United States
Growth in France, like in much of Europe, has been hit by a series of external shocks over the past year, including a tariff dispute with the United States that has weighed on exports, while the U.S.-Israeli war with Iran has pushed up oil prices and dampened tourism.
Labor Market and Year-End Review
Unemployment Rate Trends
France's unemployment rate rose to 8.1% in the first quarter of 2026, its highest since 2021 during the COVID-19 pandemic.
Annual Economic Growth in 2025
France's economy ended 2025 with a modest slowdown in growth, but expanded 0.9% throughout the year, outperforming the 0.7% assumption used in government budget planning.
(Reporting by Dimitri Rhodes in Gdansk, editing by Milla Nissi-Prussak)
