world-economy

France's Economy Shrinks Unexpectedly as European Growth Diverges

France's economy contracted unexpectedly in early 2026, marking a reversal that underscores vulnerability to geopolitical pressures from the Iran conflict. This contraction stands in contrast to divergent economic performance across Europe. Finland posted its strongest quarterly expansion in nearly five years, driven by broad-based growth that offers relief to policymakers facing structural debt challenges. Sweden's economy also declined; the contraction aligned with expectations and may give its central bank room to defer rate increases. These divergent trajectories across major European economies highlight growing disparities in regional resilience and raise questions about the continent's ability to weather international tensions.