INSEE sharply lowers its growth forecast for 2026

The French economy is “stall”. In a note entitled "orange vigilance on growth", and published Thursday September 10, INSEE sharply lowered its growth forecast for 2026. It goes from 0.4% of gross domestic product compared to 0.7% previously. This new forecast also marks a slowdown compared to growth of 0.9% in 2025. If this figure is confirmed, it would be the lowest growth since 2012, excluding Covid.

The National Institute of Statistics puts forward several explanations: "The heatwave episodes of the summer would cost 0.1 point of annual growth to the French economy in 2026, mainly due to the drop in agricultural production", and "the closure of the Strait of Hormuz from March, through which approximately 20% of the world's oil and liquefied natural gas transit, has somewhat hindered this dynamic".

Household purchasing power would decline by 0.4% over the year

“Unlike its neighbors” and “unlike the rest of Europe, activity declined this winter and remained sluggish in the spring,” underlined Dorian Roucher, head of the INSEE economics department, during a press conference. By the end of the year, "France would return to timid growth", but "on an annual average, it would pale in comparison to its neighbors", with growth "three times less" than "the neighbors of the euro zone or the United Kingdom".

In France, INSEE therefore expects growth of 0.1% in the third quarter, and 0.2% in the fourth, after -0.2% in the first quarter and 0.0% in the second. Inflation, which reached 2.4% in August, should continue to increase to reach 2.9% in France at the end of the year.

Household purchasing power is expected to decline by 0.4% over the year, due to the fall in salaried employment and the sluggishness of real wages. Traditional pillar of French growth, household consumption should slow down (+0.3% over the year), after 2024 and 2025 which are already sluggish.

On the investment side, that of businesses would be “weighed down by prospects of sluggish demand and a rising cost of capital” and would return to the red in 2026 (-0.3%), just like that of households (-1.3%).