France Reduces Trade Deficit in First Half of 2023

In a rare turn of events, France has reduced its trade deficit in the first half of 2023. According to data released by the Ministry of Foreign Trade, Attractiveness, and French Nationals Abroad, the deficit decreased from 89 billion euros in the second half of 2022 to 54 billion euros. This improvement can be largely attributed to a decrease in energy costs, which led to a 9.4% decrease in import expenses. Meanwhile, exports only slightly declined by 0.8%. This positive development comes after France experienced its worst trade deficit in history in 2022, amounting to 164 billion euros.

The Contribution of Foreign Trade to Economic Growth

The contribution of foreign trade to economic growth is also noteworthy. For the past three quarters, trade in goods and services, which has traditionally been a weak point for the French economy, has become one of its driving forces. In the fourth quarter of 2022 and the first quarter of 2023, the trade balance contributed 0.5 percentage points to growth, and 0.7 percentage points in the second quarter of 2023. This positive contribution stands out amidst an otherwise negative economic landscape.

Sectoral Progress and Challenges Ahead

The overall maintenance of exports can be attributed to a few sectors that have shown significant progress. The aerospace industry, for example, has reached record sales levels from 2019, with a trade surplus of 16 billion euros, a 12% increase compared to the end of 2022. The automotive sector has also seen growth, driven by the rise in sales of electric and hybrid vehicles, with an 8% increase in exports. Additionally, the perfumes and cosmetics industry has experienced a 7% increase in sales abroad, while the textile sector has improved by 3%. However, the agri-food sector has faced a 5% contraction in sales due to a return to normal prices.

Despite these positive developments, economists are cautious about the sustainability of France's trade balance improvement. They believe that the improvement in the first half of the year is more due to temporary factors rather than structural changes. For instance, the transportation equipment sector has rebounded from the impact of the Covid-19 pandemic and benefited from a rebound effect related to the alleviation of semiconductor shortages.

While the reduction in the trade deficit is a positive sign for France, there are still challenges ahead. The country's trade partners, such as Germany, the United Kingdom, the United States, and China, are facing weak domestic consumption and implementing measures to favor their own companies. Additionally, the global growth of trade is expected to be limited to 2% in 2023, compared to an average of 3% before the Covid-19 crisis.

Words of the day

deficit : déficit

exports : exportations