French economy unexpectedly contracts 0.1% in Q3, missing forecasts

By Gokhan Ergocun

ISTANBUL (AA) - The French economy unexpectedly contracted 0.1% in the third quarter of 2026, falling well short of market expectations for 0.3% growth, preliminary official data showed on Friday.

The slight decline followed a flat reading in the second quarter, according to the National Institute of Statistics and Economic Studies.

A sharp deterioration in foreign trade weighed heavily on the economy, deducting 0.6 percentage points from gross domestic product growth after contributing 0.6 percentage points in the previous quarter.

Exports fell 1.7% during the July-September period, driven down by a 9.1% drop in transport equipment shipments, particularly aeronautics, alongside a 7% slump in agricultural exports.

Imports remained virtually flat, edging up 0.1% after expanding 0.9% in the second quarter.

Total production of goods and services slipped 0.1% during the quarter as manufacturing output fell 1.4%, affected by weak car manufacturing, poor summer harvests and reduced power station availability amid heat waves.

Construction output decreased 0.4%, while market services output rose 0.3%, supported by a 1% expansion in information and communication services.

Final domestic demand excluding inventories contributed 0.1 percentage points to growth, matching its performance in the second quarter.

Household consumption growth accelerated to 0.4% from 0.2% in the previous quarter, bolstered by electric vehicle purchases, rebounding electricity spending and recreational services.

Public administration consumption rose 0.3%, continuing its upward trend after a 0.4% increase in the second quarter.

In contrast, total investment, measured as gross fixed capital formation, fell 0.6% in the third quarter following a 0.5% contraction in the preceding three months.

Investment in manufactured goods dropped 1.9% on declines in transport equipment, while construction investment decreased 0.5%.

Changes in inventories provided a positive contribution of 0.4 percentage points to gross domestic product growth, largely driven by aerospace products after a sharp drawdown in the second quarter.

Gökhan Ergöçün