France’s Economy Flatlines Amid Export Slump, Weak Spending

France’s economy flattened in the first three months of 2026, amid falling exports, weaker household spending, and a slowdown in construction.

French statistics agency INSEE reported on May 29 that gross domestic product (GDP) stalled in the first quarter, following growth of 0.2 percent in the final quarter of 2025.

The figures suggest Europe’s second-largest economy entered the year with little momentum amid a difficult international environment and subdued domestic demand.

INSEE data showed that weaker exports, softer consumer spending, and a downturn in construction offset gains in parts of the manufacturing sector. Household spending slipped by 0.1 percent during the quarter after rising 0.4 percent at the end of last year.

French consumers bought fewer goods, including food, fuel and computers, while spending on services such as restaurants and hotels remained largely unchanged.

French Economy Minister Roland Lescure said in a May 29 social media post that growth slowed because of “several cyclical headwinds” and delays in adopting the national budget, which may have encouraged some businesses and consumers to take a wait-and-see approach.

“We remain vigilant, without giving in to alarmism,” Lescure said.

The slowdown was also evident among businesses. Investment fell 0.4 percent during the quarter, reversing a modest gain in late 2025. Construction activity was particularly weak, with fewer investments in civil engineering projects and building maintenance.

The European Commission expects France’s economy to grow by 0.8 percent in 2026 and pick up to 1.1 percent in 2027 as energy costs ease. According to the EU’s May 21 forecast, the country’s public debt is set to increase to some 120 percent of GDP by 2027, up from 115.6 percent last year.

Exports Take a Hit

The largest drag on growth came from foreign trade. French exports fell 3.8 percent in the first quarter, reversing gains recorded at the end of last year.

The sharp decline was driven largely by transportation equipment, particularly aerospace products, after several strong quarters for the sector. Exports of services also continued to decline.

Imports also fell, but not enough to offset the drop in exports. As a result, trade reduced overall economic growth during the quarter.

The slowdown comes as France and other European economies continue to face a challenging global backdrop. Growth has been affected by trade tensions with the United States that have weighed on exports, while conflict involving Iran has contributed to higher energy prices and weaker tourism demand.

Not every sector struggled. Manufacturing output rose 0.7 percent during the quarter after declining in late 2025.

Much of that increase came from aerospace production, including aircraft engines and airframes. Production also improved in capital goods and other manufactured products.

However, those gains were offset by weakness elsewhere.

Construction output fell 1.3 percent, while production in energy, water and waste management declined 1.8 percent. Transportation services also remained weak.

Overall production across goods and services increased by just 0.1 percent, underscoring the lack of momentum across the broader economy.

France’s inflation rate, calculated using a measure comparable across eurozone countries, accelerated to 2.8 percent in May. The statistics office said inflation was fueled mainly by higher energy prices.

Lescure said May inflation remained relatively contained compared with many neighboring European countries. He said the increase was driven mainly by higher energy prices rather than broad-based price pressures across the economy.