France’s economy unexpectedly shrank in the third quarter of the year, raising fresh concerns about the country’s economic stability. The downturn comes as France faces several challenges, including higher borrowing costs, political uncertainty, violent protests and growing concerns about its public finances.

GDP Falls 0.1% Between July and September

According to data released by France’s national statistics agency, Insee, gross domestic product (GDP) declined by 0.1 per cent in the July-September period compared with the previous quarter. The contraction was mainly driven by a continued decline in investment and weaker export performance.

Economic Performance Misses Market Expectations

The contraction surprised economists, who had expected the economy to expand by 0.1 per cent during the quarter, according to a Bloomberg survey. The latest figures indicate that the eurozone’s second-largest economy performed worse than market expectations.

Political Uncertainty and Fiscal Pressures Weigh on Outlook

The unexpected decline has increased concerns about France’s economic outlook. Rising fiscal pressures and ongoing political instability are affecting business confidence and discouraging investment. These challenges could further complicate the government's efforts to strengthen economic growth and maintain financial stability.