Key facts
- France's 2026 economic growth forecast has been reduced to 0.7% from 0.9%.
- The revision considers a challenging start to the year and global factors like the Middle East conflict and oil price shocks.
- INSEE projects 0.7% growth for 2026, with oil price increases impacting consumers.
- Industrial sectors, including aerospace and shipbuilding, are expected to boost exports.
- Inflation is forecast to reach 3.0% by year-end due to rising oil prices.
France's Finance Ministry announced on Tuesday that it has lowered its economic growth forecast for 2026 to 0.7%, down from a previous estimate of 0.9%. This revision, part of a mid-year public finances update, takes into account a less favorable start to the year than anticipated, influenced by special budget legislation and the international situation, particularly the conflict in the Middle East.
The national statistics agency INSEE also projects modest growth for France in 2026, estimating the economy will grow by 0.7% this year after achieving 0.9% in 2025. INSEE attributes this slowdown to an oil price spike, which is expected to reduce growth by 0.2 to 0.3 percentage points. Consumers are bearing the brunt of this energy shock through higher costs and a weak labor market that limits wage growth, leading them to curb spending and draw on savings.
Despite consumer pressures, French industrial companies are showing resilience. Sectors such as chemicals, refining, shipbuilding, and aerospace are expected to benefit from strong export demand and full order books, with shipments projected to rise by 10% this year. On a quarterly basis, INSEE forecasts growth to rebound to 0.3% in the second quarter, following a 0.1% contraction at the start of the year, before slowing to 0.1% in both the third and fourth quarters.
Inflation is also expected to rise, with EU-harmonised inflation projected to increase from 2.4% in June to 3.0% by December as higher oil prices gradually impact broader costs.