France’s economy shrank in the first quarter of 2026. That sentence alone would have seemed implausible six months ago, when the Banque de France was projecting a comfortable 1.2% annual growth rate and inflation appeared to be under control.
Now the central bank has cut its 2026 growth forecast to roughly 1%, down from that earlier 1.2% estimate, after GDP contracted -0.1% quarter-on-quarter in Q1. It’s the first time the French economy has posted a negative quarter since Q2 2020.
What went wrong
Foreign trade alone subtracted 0.9 percentage points from growth in the first quarter. Exports weakened, household consumption pulled back, and business investment cooled.
Geopolitical tensions in the Middle East have pushed energy costs higher, creating a ripple effect through the French economy that’s squeezing both consumers and businesses.
