Energy costs boost trade deficit to new record

17th August 2005, Comments 0 comments

PARIS, Aug 17 (AFP) - The French deficit surged to a record EUR 11.193bn (US $13.78bn) in the first six months of the year in the face of soaring energy costs and rising imports, the customs service said Wednesday, quoting figures corrected for seasonal variations.

PARIS, Aug 17 (AFP) - The French deficit surged to a record EUR 11.193bn (US $13.78bn) in the first six months of the year in the face of soaring energy costs and rising imports, the customs service said Wednesday, quoting figures corrected for seasonal variations.

The shortfall in June widened to EUR 1.194bn from EUR 1.148bn in May. The deficit for the first half of 2004 had been limited to EUR 581 million.

The finance ministry said that at prices prevailing at the beginning of August France could face an energy sector deficit of more than EUR 40bn this year after EUR 29bn in 2004.

"The increased impact of the energy component has accounted for nearly half the deterioration in the overall trade balance for France" in the past year, the ministry said, citing rising oil prices.

Alexandre Bourgeois, an economist at Natexis Banques Populaires, said the trade deficit of the last 12 months – EUR 20.6bn -- was the highest in French history.

"At these sort of levels, the subject will start becoming a national political issue," he warned.

The figures showed that exports in the January-June period had increased by 2.6 percent fom the second half of 2004 to EUR 175.8bn, but they were unable to keep pace with the rise in imports.

Imports rose 3.5 percent in the period to EUR 187bn.

"Exports only increased by 2.6 percent compared to the second half of 2004 as they were particularly affected by the weak demand from Germany and Italy," said Nicolas Bouzou of Paris-based economics consultancy Xerfi.

First-half sales of French products to the other 11 members of the eurozone increased by 2.1 percent, while sales accelerated to other trading partners.

Exports to Asia increased by 12.3 percent compared to the second half of 2004. They grew by 11.7 percent to Africa and by 4.8 percent to the Americas, the customs service said.

Bourgeois at Natexis Banques Populaires said French exporters were still penalised by the strong euro, which makes their products more expensive in foreign markets.

"At US $1.23 (the euro-dollar exchange rate), the euro is too high to allow French exporters to regain their competitiveness and recover their sales," he said.

France-based aircraft manufacturer Airbus was the exception, however. It sold 24 planes in June for a total of EUR 1.537bn, which was described as an "excellent performance" by the French customs service.

The sales took overall aeronautic exports to EUR 6.529bn in the first half from EUR 5.931bn in the same period last year.

Copyright AFP

Subject: French news, economy, trade deficit, imports, exports, energy costs, euro, Airbus

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