Growth in the first quarter of 2026: a stalled GDP, declining construction, and rising inflation

Contrary to expectations, this stagnation is not directly linked to the war in the Middle East, even if its repercussions are beginning to be felt on inflation.

Zero growth despite positive forecasts

The projections were, however, more optimistic. The Bank of France was still considering growth of "up to 0,3%" in mid-April, while INSEE was forecasting 0,2%, after an initial downward revision.

This result contrasts sharply with the trend observed among several European partners:

• Germany: +0,3%
• Spain: +0,6%
• Italy: +0,2%

In the euro zone, growth reached 0,1%, compared to the expected 0,2%.

The INSEE points out that French GDP "is stalling", after an increase of 0,2% in the fourth quarter of 2025 and annual growth of 0,9% in 2025.

Construction and public works: the main obstacle to activity

The main factor explaining this stagnation lies in the unexpected decline of the construction sector, down -1,5%, particularly impacting public works.

This phenomenon could be "linked to the electoral cycle", according to Marie Leclair, head of the National Accounts department at INSEE.

More generally:

• Domestic demand (excluding inventories) makes no contribution to growth
• Foreign trade has a "strongly negative" impact
• Only the replenishment of stocks, particularly in the aeronautics sector, is preventing a contraction of GDP.

Household consumption: persistent vulnerabilities

Concerns persist regarding consumption.

"The persistent weaknesses in household consumption of goods are becoming entrenched," warns Maxime Darmet, economist at Allianz Trade, also pointing to "the major problem" in construction.

2026 growth target under pressure

The government maintains an annual growth forecast of 0,9% for 2026, already lowered by 0,1 point due to the international context.

However, several risks weigh on this objective.

"The blockade of the Strait of Hormuz could reduce it by 0,3 points (...) to 0,6%", estimates Sylvain Bersinger.

Nevertheless, Fabrice Lenglart tempers expectations: "The 0,9% target remains within the possible range of appreciation," while acknowledging that "this morning's news makes it a little more difficult to achieve."

According to him, "We would need growth of approximately 0,25%" in each of the next few quarters.

Exceptional factors caused the slowdown

Certain specific factors could also explain this stagnation:

• Late adoption of the budget in February
• Airbus deliveries decline
• End of the social leasing scheme for electric vehicles

According to Stéphane Colliac, these "exceptional" factors could be corrected in the second quarter. An upward revision therefore remains possible, allowing the year to "still finish at +0,9%".

Deteriorating economic climate in April

The first indicators for the second quarter already show a deterioration:

• The business climate has "darkened considerably"
• Household confidence has "deteriorated sharply"

This decline is the most pronounced since the start of the war in Ukraine.

Rising inflation: a direct impact of the geopolitical context

Inflation is rising again in France, driven by soaring energy prices. The price of Brent crude has jumped from $60 at the end of 2025 to over $126 a barrel.

Over one year:

• April inflation: 2,2%
• March: 1,7%
• February: 0,9%

"This is the first sign of the impact of the geopolitical crisis," Fabrice Lenglart points out.

Despite this acceleration, France remains "below what we observe in our main neighbors." Across the eurozone, inflation has reached 3%.

In this context, the European Central Bank has chosen to keep its key interest rates unchanged.

Illustrative image of the article via Depositphotos.com.