Growth: The French economy is expected to have avoided recession in the second quarter

In the first quarter of 2026, both domestic demand and foreign trade weighed on activity, according to the National Institute of Statistics and Economic Studies (Insee).

The 0,1% contraction in gross domestic product (GDP) had led some economists to fear a technical recession, characterized by two consecutive quarters of declining economic activity. This concern was exacerbated by inflation triggered by the conflict in the Middle East, which began at the end of February.

“Birds of ill omen,” the Minister of the Economy, Roland Lescure, had declared at the end of May to those who were announcing a recession.

The outlook subsequently improved, particularly after the signing of a memorandum of understanding between the United States and Iran on June 17. This agreement helped to lower energy prices and inflation.

The price increase thus stood at 1,8% year-on-year in June, after 2,4% in May.

A rebound is expected in the second quarter.

For the second quarter, INSEE anticipates a temporary rebound in growth of 0,3%. This would be linked in particular to strong production in several industrial sectors, such as refining and chemicals, while producers in the Gulf have been penalized by the war.

This spring improvement is expected to be followed by a slowdown. INSEE forecasts limited growth of 0,1% in the third quarter, and then again at 0,1% in the fourth quarter.

The Bank of France, for its part, raised its second-quarter growth forecast to 0,2% in early July, compared to the stagnation initially anticipated. It expects activity to be supported by a rebound in industry and market services.

Like INSEE and the Bank of France, most economists now anticipate growth of between 0,2% and 0,3% in the second quarter.

"We should have a pleasant surprise compared to what we were expecting recently," with "a fairly marked rebound in the second quarter," at +0,3%, says Anthony Morlet-Lavidalie, economist at Rexécode.

Industry and services would support the activity

Anthony Morlet-Lavidalie forecasts a favorable quarter for French industry. Defense, aerospace, the naval sector, part of the space industry, as well as certain electronic and optical goods, are expected to be among the best-performing sectors.

"A good quarter for French industry," with some sectors "in very good shape," anticipates Anthony Morlet-Lavidalie.

The economist also believes that the services sector remains dynamic. The resumption of Airbus deliveries should, in particular, boost aerospace exports, following their decline in the first quarter.

The services sector "continues to perform very well" and the resumption of Airbus deliveries should allow "a very marked rebound in aeronautical exports", says Anthony Morlet-Lavidalie.

However, the situation appears less favorable on the household consumption side.

"It is possible, in particular, that consumption of goods has stalled," acknowledges Anthony Morlet-Lavidalie.

An economic dynamic that remains fragile

Economists at Crédit Mutuel Arkéa are more cautious and predict GDP growth limited to 0,1% in the second quarter.

"There are real rebound effects compared to the first quarter, but I think it is important to emphasize that the dynamic remains very negative," particularly due to "the geopolitical context," says Julien Lecumberry, economist at Crédit Mutuel Arkéa.

According to him, the consequences of the conflict continue to weigh on both households and businesses.

“There is no doubt today that household purchasing power will contract in 2026,” while “on the business side, the energy and inflationary shock more generally has squeezed margins,” continues Julien Lecumberry.

The government is maintaining a cautious forecast

In July, the government lowered its growth forecast for the whole of 2026 to 0,7%. It is also adopting a cautious stance for the second half of the year.

The second quarter is expected to be "marked by the consequences of the conflict in the Middle East on activity", with "a cautious approach for the third and fourth quarters", the government indicated.

The scenario of a technical recession seems to be receding, although the French economy remains weakened by geopolitical tensions, inflation and weak domestic demand.

There is "no recessionary pattern as feared when the first quarter results were published." "The French economy is far from being in top form," but it "has also demonstrated considerable resilience," concludes Julien Lecumberry.