French payments deficit deepens in January

16th March 2007, Comments 0 comments

PARIS, March 16, 2007 (AFP) - The French monthly payments deficit, a key measure of underlying economic performance, deepened in January, official data showed on Friday.

PARIS, March 16, 2007 (AFP) - The French monthly payments deficit, a key measure of underlying economic performance, deepened in January, official data showed on Friday.

The data, showing a deficit of 2.8 billion euros (3.7 billion dollars) from 2.7 billion euros in December, come in the middle of a presidential election campaign.

The figures are also set against a background of concern among economists that France is developing a structural payments weakness.

The figures, from the Bank of France, were seasonally adjusted for January and revised for December. In November 2006, the balance of payments on current account, which registers most flows of payments into and out of the country, showed a deficit of 2.3 billion euros.

However, in January the balance of trade in goods improved slightly to show a deficit of 2.7 billion euros from a deficit of 3.1 billion euros in December.

Economists are particulary concerned that big trade deficits are a sign of falling competitiveness by French industry.

A breakdown of the figures showed that direct French investment abroad totalled 8.2 billion euros after 18.3 billion euros in December.

Direct foreign investment in France fell by 1.2 billion euros in January from the figure for December but remained at "a high level" of 5.1 billion euros.

Flows of investment in portfolio or financial investments such as stocks or bonds showed surplus of 13.6 billion euros, about half a surplus of 26.2 billion euros in December.

Investors in France, who had been net sellers of foreign instruments in December had increased their purchases, but "at a moderate rate," mostly in the form of bonds.

Foreign investors had put 18.7 billion euros into French instruments, down from 18.1 billion euros in December.

Part of the balance of payments, described as "other investments" showed a surplus of 12.8 billion euros in January after a deficit of 36.0 billion euros in December.

In this category figured an increase of net debt by financial institutions to the extent of 19.7 billion euros which was "slightly more" than their net purchases of foreign instruments in the month, the central bank said.

Copyright AFP

Subject: French news

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