Paris (France) (AFP) - France’s economy recorded zero growth in the first quarter of this year due to “sluggish” domestic demand and a “strongly” negative contribution from foreign trade, the national statistics agency INSEE said Thursday.

The first estimation of first quarter gross domestic product (GDP) shows the impact of the war in the Middle East, which began on February 28.

As little as two weeks ago, the French central bank estimated that the country’s economy could grow by as much as 0.3 percent in January through March, while INSEE had cut its forecast from 0.3 percent to 0.2 percent growth at the end of March.

France’s economy had expanded by 0.2 percent in the final quarter of 2025.

Final domestic demand is “sluggish”, said INSEE, with households spending declining “slightly”, making a -0.1 percentage point contribution to growth in the first quarter after having provided a 0.4 percent boost in the final quarter of 2025.

Foreign trade made a “strongly” negative 0.7 percentage point contribution to growth in the quarter, with exports falling “sharply”, according to INSEE.

In mid-April, France slightly lowered its full-year GDP forecast to 0.9 percent, down from a previous 1.0 percent over the economic situation linked to war in the Middle East.

“A very moderate impact is expected on growth,” Finance Minister Roland Lescure said at the time.

He also said he expected inflation to remain limited “despite the energy shocks and sharp rise in oil prices”.

But INSEE on Thursday said that consumer prices rose by 2.2 percent year-on-year in April following a 1.7 percent increase in March.

This increase was driven by a sharp rise in energy prices, which surged by 14.2 percent year-on-year in April after a 7.4 percent increase in March, as the war in the Middle East sent global oil prices soaring.