IEDOM has published its Q2 2026 economic trends report for Réunion. The picture is mixed: the business climate indicator (ICA) returns to its long-term average, pulled down by a resurgence in inflation — imported via Middle East tensions — and a worrying surge in household over-indebtedness.
ICA Drops 3.6 Points, Returns to Historical Baseline
The ICA stood at 100.1 points in Q2 2026, down 3.6 points from the previous quarter and back to its long-term average. After several quarters of recovery observed throughout 2025, the return to the baseline marks the end of a post-crisis rebound cycle. The Middle East conflict is explicitly identified in IEDOM's report as a driver of this slowdown: activity resumed in the first quarter but was caught up by the Middle East crisis in Q2.
Inflation: Fuel Prices Reignite Price Pressure
After near-stability in March (+0% year-on-year), inflation rebounded to +1.5% in June, driven almost entirely by fuel prices rising 22.2% year-on-year by end of June. The good news: IEDOM observed a rapid easing in July, with inflation dropping back to +0.7% as oil and food prices retreated. The trajectory remains fragile and directly tied to geopolitical tensions.
Employment and Retail: Warning Signs
The labour market recorded a slight deterioration: jobseeker registrations in categories A, B and C rose 1.6% over the quarter, interrupting three consecutive quarters of decline. In retail, business owner confidence weakened with expectations remaining pessimistic.
More worrying still: over-indebtedness filings reached 216 per month in July 2026, a 22% year-on-year surge. Over the twelve months to June 2026, French overseas territories recorded 3,040 business restructurings and liquidations.
Why It Matters
For decision-makers and investors operating in Réunion, these figures paint a picture of a resilient but strained economy. Tourism and services are absorbing part of the shock, but retail — a barometer of household consumption — is sending negative signals. Rising over-indebtedness, combined with a slight labour market pullback, signals eroding purchasing power that could weigh on domestic demand in the second half of the year.
Sources: IEDOM, Q2 2026 Economic Trends; IEDOM Réunion Newsletter, August 2026