France's first-quarter data shows slowed growth, rising prices and collapsing exports, laying bare how quickly the Iran war's energy shock is feeding through to Europe's second-largest economy.
France's economy ground to a halt in the first quarter of 2026, official figures showed Thursday, as soaring energy costs linked to the Iran war began squeezing households and businesses.
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France and Italy have both trimmed their growth outlooks, while Germany has halved its 2026 forecast to 0.5%.
Gross domestic product was flat between January and March, according to a first estimate from the French national statistics institute INSEE, a sharp step down from the 0.2% expansion recorded in the final quarter of 2025 and below analyst forecasts.
The data paint a picture of an economy losing traction across the board.
Consumer spending dipped 0.1% over the quarter, while overall investment fell 0.4%, dragged down by declines in construction and manufactured goods.
Exports slumped 3.8%, delivering a 0.7 percentage point drag on growth from net trade. Only a build-up in inventories, which added 0.8 points, prevented an outright contraction.
Inflation, meanwhile, quickened to 2.2% in April — the highest reading since mid-2024 and above what analysts had expected — pointing to price pressures running in the opposite direction to growth.
The figures capture only the opening weeks of the conflict that began on 28 February, when US-Israeli strikes targeted Iranian military infrastructure and triggered an effective blockade of the Strait of Hormuz, the chokepoint through which roughly 20% of global seaborne crude oil passes.
Those price rises feed directly into household energy bills, industrial costs and transport, compressing purchasing power at a moment when French consumers were already cautious.
The eurozone economy could contract in the second quarter and then flatline over the second half of the year if the conflict persists for several months, according to Chatham House.
Thursday's figures are the first of a wave of first-quarter GDP releases from major European economies. The eurozone as a whole is expected to show steady growth of 0.2%.
