France's Economy Set for Steady but Modest Growth in Early 2026, With Regional Variations

The French economy is projected to sustain a slow yet steady growth pace in the first quarter of 2026, with the Banque de France forecasting a GDP increase of between 0.2% and 0.3%. This aligns with forecasts from the National Institute of Statistics and private sector analysts like BNP Paribas, which expect growth near 0.3% in Q1 and an annual expansion of approximately 1%. Banque de France's chief economist Xavier Debrun described the economic momentum as "imperturbable" yet "relatively soft," reflecting resilience amid global economic uncertainty and geopolitical tensions.

The services sector is playing a particularly vital role, expected to grow by 0.4% in the first three months of 2026. Given that services make up 59% of France's economy, strong performance in business services, information and communication, and hospitality sectors is pivotal to maintaining overall stability.

Regionally, the Pays de la Loire illustrates a "two-speed" economy. A Banque de France survey of 1,500 local business leaders reported that while the industrial sector only grew marginally by 0.2%, the services sector surged nearly 5%. Construction remained stable despite mixed results within its components. Business leaders anticipate a slight recovery in 2026, with industrial activity expected to rise by 3%, modest 1.7% growth in services, and a stabilization within construction. However, many companies foresee challenges ahead, noting planned reductions in investment (48% of firms) and sustained pressure on profit margins (45%), especially in retail and hospitality sectors.

Xavier Debrun emphasized that positive economic signals are tempered by geopolitical uncertainties and France's fragmented domestic political environment—factors that could influence economic outcomes, especially as the country approaches the 2027 presidential election. Despite these concerns, ongoing strength in defense and aerospace sectors underscores France's economic resilience.

Overall, France’s economy appears on track for gradual growth with supportive industrial and service sector contributions, albeit with caution about potential risks ahead.