France’s economy showed no growth in the second quarter, according to the national statistics agency, which revised its initial estimate lower and raised concerns about the country’s economic prospects for the remainder of the year.

 

Finance Minister Roland Lescure said the downward revision reflected the initial impact of what he described as a “horrible summer”, marked by a series of heatwaves, drought conditions and wildfires across France.

 

France’s INSEE statistics agency revised its estimate for second-quarter growth from an initial 0.2% to 0.0%, following a 0.2% contraction in the first quarter.

 

The downward revision was partly attributed to weaker agricultural output, which was particularly affected by the summer’s intense heatwaves and drought conditions.

 

The downgrade has put the government’s 0.7% full-year growth target increasingly out of reach, with INSEE estimating that the economy would need to expand by 0.5% in both the third and fourth quarters to meet the forecast, Reuters reports.

 

The weaker growth outlook also increases the risk that the government will fall short of its goal of reducing the fiscal deficit to 5.0% of GDP this year, from 5.1% in 2025.

 

Lescure said his ministry would have to account for a potentially weak third quarter when it revises France’s growth and deficit projections in September, ahead of the presentation of the 2027 budget bill in early October.

 

INSEE reported that household consumption, a key driver of the French economy, increased 0.3% in the second quarter, recovering from a 0.3% decline in the first quarter. The rebound was supported by stronger spending on food, energy and manufactured goods.

 

Exports rebounded strongly in the second quarter, rising 2.9% after falling 3.0% in the previous quarter, with the recovery largely driven by a surge in aeronautical exports. However, the increase in shipments prompted companies to run down inventories, which weighed on growth by 0.7 percentage points.

 

Meanwhile, INSEE reported that inflation accelerated to a three-month high of 2.7% in August, based on EU-harmonised data, as energy prices recovered.

 

The summer’s extreme weather has added further uncertainty to an economic outlook already weighed down by a series of external shocks over the past year, including trade tensions with the US and elevated energy prices linked to the US-Israeli conflict with Iran.