France Economy Contracts 0.1 Percent in Third Quarter as Exports Slump

France's economy contracted 0.1 percent in the third quarter, according to preliminary data from the statistics office Insee released on Friday, October 30, 2026. The fall covered the three months through September. It followed stagnation in the second quarter and a contraction of 0.2 percent in the first quarter.

Analysts polled by Reuters had expected gross domestic product to increase by 0.1 percent in the third quarter. Instead, weaker exports and weaker investment pulled output down, while household consumption rose and partly offset the fall.

Exports fall, led by transport equipment

Exports fell 1.7 percent in the third quarter, a swing of 4.5 percentage points from the previous quarter. The fall was mainly linked to a 9.1 percent decline in exports of transport equipment, with aerospace as the main negative driver. That drop followed growth of 20.8 percent for transport equipment exports in the second quarter.

The contribution of foreign trade to growth was negative 0.6 points, as exports fell and imports rose 0.1 percent, following a 0.9 percent increase in imports in the prior period. Changes in inventories added 0.4 points to growth, in contrast to a negative 0.7 points in the prior period, Insee figures reported by dpa-AFX showed.

Investment falls for a second quarter

Gross fixed capital formation, the main measure of investment in the national accounts, fell 0.6 percent in the third quarter. That extended a decline of 0.5 percent in the second quarter. Construction and transport equipment investments dragged on business spending, Reuters reported.

Investment among households and businesses tumbled in the quarter, Dow Jones Newswires reported, and output in the construction sector declined once again, according to Insee.

Household consumption rises in the quarter

Household consumption rose 0.4 percent in the quarter, following a 0.2 percent increase in the prior quarter. Energy consumption rebounded, rising 1.2 percent after a 2.0 percent fall in the previous quarter, due to increased spending on electricity, Insee said.

"Consumption of transport equipment is on the rise again, driven in particular by purchases of electric vehicles," Insee said.

A separate monthly reading was weaker. Household spending dropped for the second straight month in September, decreasing unexpectedly by 0.5 percent, the same pace as in August. Spending had been forecast to grow 0.2 percent, Insee said in a separate communique.

Finance minister warns of a wall ahead

Finance Minister Roland Lescure addressed the run of weak figures on France Info radio. "For three quarters now, there has been no growth," Lescure said, according to AFP.

"France is not heading toward a crisis. But if we fail to achieve the turnaround outlined in the budget, we are headed straight for a wall," Lescure said.

The figures arrive against a difficult position for public finances. France's public debt is close to 120 percent of gross domestic product, and the government expects the deficit to rise to 5.4 percent of gross domestic product in 2026, well above the 3 percent ceiling targeted by European Union rules, Dow Jones Newswires reported.

Earlier in October, the International Monetary Fund downgraded its expectations for French growth this year to 0.4 percent, from 0.9 percent in April. The fund warned that the country needed to get its public finances in order.

Inflation added to the pressure. Inflation accelerated to 3.4 percent on an annualised basis in October, from 3.1 percent in September. That was the fastest rate since January 2024, Insee said, according to AFP.