Financial News: French GDP Growth Slows As Expected

French GDP Growth Slows As Expected

(RTTNews) - The French economy grew at a slower pace towards the end of the year as political and fiscal uncertainty weighed on investment and consumption, official data revealed on Friday.

Gross domestic product posted a quarterly growth of 0.2 percent in the fourth quarter, the statistical office INSEE reported.

The rate came in line with expectations and followed third quarter's 0.5 percent expansion and the 0.3 percent rise in the second quarter.

Overall economic growth in 2025 softened to 0.9 percent from 1.1 percent in 2024. ING economist Charlotte de Montpellier observed that the prolonged budget saga and the US trade war weighed on activity in 2025.

The 2026 outlook is moderately positive, with GDP growth expected to reach around 1 percent, the economist said. Growth could reach 1.1 percent next year but political and fiscal risks remain elevated, she noted.

Overall, persistent uncertainty will likely keep French growth slightly below the European average, the economist added.

The expenditure-side of GDP showed that gross fixed capital formation rose only 0.2 percent in the fourth quarter of 2025 after the 0.7 percent rise in the prior quarter.

Household consumption growth accelerated moderately to 0.3 percent from 0.1 percent. Government spending also grew 0.3 percent but weaker than the 0.7 percent rise in the preceding period.

Overall, domestic demand excluding inventories, contributed positively to GDP growth by 0.3 points, data showed.

Foreign trade made another positive contribution to growth, by 0.9 points as exports continued to grow, while imports fell back sharply.

However, exports growth eased to 0.9 percent from 3.2 percent, and imports decreased 1.7 percent, reversing the 1.5 percent rise a quarter ago.

Conversely, the contribution of inventory changes to GDP growth was strongly negative this quarter, by -1.0 point after -0.4 points in the third quarter.

Another report from INSEE showed that consumer spending dropped for the second straight month in December due to weaker consumption of engineered goods and food.

Household consumption dropped 0.6 percent in December, worse than November's 0.3 percent decrease. Consumption of engineered goods slid 1.0 percent and that of food declined 0.9 percent, while energy consumption rebounded 0.8 percent.

In a separate report, the INSEE said domestic producer prices declined 2.0 percent in December from a year ago, sharper than November's 1.5 percent drop. At the same time, the monthly growth eased to 0.2 percent from 2.8 percent in November.

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