France Posts Zero Growth in First Quarter GDP

France's Economy Records Zero Growth in First Quarter Due to Sluggish Domestic Demand and Negative Foreign Trade

France's economy recorded zero growth in the first quarter of this year, according to the national statistics agency INSEE. The agency attributed this performance to sluggish domestic demand and a strongly negative contribution from foreign trade.

The first estimation of first quarter gross domestic product (GDP) highlights the impact of the war in the Middle East, which began on February 28. This conflict has had a significant effect on France's economy, with the country's GDP growth forecast being revised downward multiple times in recent weeks. As recently as two weeks ago, the French central bank estimated that the country's economy could grow by as much as 0.3 percent in January through March, while INSEE had cut its forecast from 0.3 percent to 0.2 percent growth at the end of March.

In comparison to the final quarter of 2025, France's economy had expanded by 0.2 percent. However, this growth was largely driven by final domestic demand, which is now sluggish. Households' spending has declined slightly, making a -0.1 percentage point contribution to growth in the first quarter after having provided a 0.4 percent boost in the final quarter of 2025.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Foreign trade has also had a significant impact on France's economy, making a strongly negative 0.7 percentage point contribution to growth in the quarter. Exports have fallen sharply, according to INSEE.

GDP Growth Forecasts

France slightly lowered its full-year GDP forecast to 0.9 percent in mid-April, down from a previous 1.0 percent due to the economic situation linked to the war in the Middle East. Consumer prices rose by 2.2 percent year-on-year in April, following a 1.7 percent increase in March. This increase was driven by a sharp rise in energy prices, which surged by 14.2 percent year-on-year in April after a 7.4 percent increase in March, as the war in the Middle East sent global oil prices soaring.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline