French GDP at Risk of Contraction

Weak May PMI data suggests the French economy will contract by 0.1% in Q2 2026 due to energy price shocks. This deterioration makes official government growth and deficit targets appear increasingly unreachable.

Key Takeaways

• 1.French PMI indices for May fell sharply, with the composite index hitting a five-and-a-half-year low of 43.5, signaling a high risk of economic contraction in Q2.
• 2.Rising energy prices resulting from the war in Iran are cited as the primary cause for the deterioration in both services and manufacturing sectors.
• 3.ING forecasts a mild GDP contraction of -0.1% for the second quarter of 2026, making the government's annual growth target of 0.9% unlikely to be met.

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