France’s current account deficit narrowed by 29.7 billion euros over the past six months, from -39.3 billion euros to -9.6 billion euros, mainly due to falling energy prices, which made it cheaper to import goods.
Imports of goods decreased by 9.4% compared to the second half of 2022, while exports remained stable, with only a slight -0.8%. In monetary terms, the trade deficit narrowed from -89 billion euros to -54 billion euros, the difference mainly due to a significant drop in energy prices after a volatile 2022.
The largest growth in exports was in the aviation industry, where exports grew by 12% over the past six months, and in the automotive industry, where exports of electric vehicles grew by 8%.
This is “very good news,” French Trade Minister Olivier Becht told reporters Tuesday (August 8). “We are seeing an improvement (in the balance of trade) even after taking into account energy and military spending,” he added, “despite the global economic tensions” between the Chinese and American superpowers.
Overall, trade has “clearly contributed” to economic growth, he added.
France’s trade balance figures for 2022 hit a record deficit of -164 billion euros, compared to -78 billion euros in 2021. tripled from 45 to 115 billion euros compared to 2021.
The relative improvement in the French trade balance in the first half of 2023 is partly due to the slow recovery of the Chinese economy after the end of all measures to combat COVID-19. French exports to China have increased by 7.3% over the past six months, mainly due to the aviation sector.
“We are gaining points compared to Germany, whose exports to China fell by 5% (over the same time period),” Becht explained.
France has become a thriving financial market since Brexit
France has historically had a high trade deficit in goods, with consistent surpluses in both services and finance. This time around, the trend continues, with a €20bn services surplus driven by both the tourism industry (+€11bn) and financial services.
According to Becht, the numbers show that Paris has become a thriving financial center since Brexit. Last November, Paris overtook London as the largest stock exchange in the EU.
In terms of foreign direct investment (FDI), the income of foreign affiliates of French companies increased by 3.4 billion euros. France remains the most attractive EU member state for FDI from third countries, ahead of Germany and the UK.
France is also seeing an increase in exports to countries with which it has a free trade agreement. Despite being “frequently criticized” as a threat to national sovereignty, Becht said exports are particularly strong, with the UK (+8%) posting a robust trade surplus and with Canada thanks to an economic deal that once discredited Global Trade Agreement (CETA). ), tentatively introduced in 2017.
There is still a long way to go before reducing the trade deficit
State support for exporting firms is at the core of successful deficit reduction, the minister told reporters, with “a clear improvement in our cost competitiveness,” a concept that involves comparing the cost of a product in a country with that of the same product. Abroad. The share of the world market for goods produced by France increased from 2.5% to 2.8% in six months.
French President Emmanuel Macron’s much-publicized reindustrialization strategy, outlined in a green industry bill currently before parliament, also signals that it will be easier to deal with international investors, the minister said.
Despite these results, Becht issued a caution: “We remain cautious and we still have a long way to go to completely close the trade deficit,” he said, warning that “existing trends depend on the vagaries of the international market economy.” Wednesday”.
Internal tensions are also important: the presentation of a new “export plan” was postponed after the July riots. Implementation is scheduled for September.
(Edited by Natalie Weatherald)
Read the original article here.