French trade deficit hits record, but analysts see hope
Analysts say the trade deficit, which surged 39 per cent to a record EUR 56.3 billion in the year to February from the corresponding period of 2008, was on the road to stabilisation.PARIS – France's trade deficit surged 39 percent to a record EUR 56.3 billion in the year to February from the equivalent figure in 2008, customs data showed on Wednesday, but analysts said stabilisation was in sight.
"Demand for French goods literally collapsed under the weight of the international recession," said analyst Aleander Law of the Xerfi research group, who added however that the trade balance could be about to rebound.
French central bank governor Christian Noyer meanwhile predicted that overall the French economy would return to growth next year after what finance ministry officials have said could be a 1.5 percent slide in 2009.
"My feeling is that there are good reasons for the economy to progressively stabilise, to stop its decline by the end of the year and to begin growing again starting in 2010," Noyer told BFM radio.
Customs officials said the yearly trade deficit figure, equal to USD 74 billion (EUR 56 billion), was also affected by higher imported energy bills.
The shortfall in February alone came to EUR 4.107 billion after EUR 3.714 billion in January.
The value of exports in February amounted to EUR 28.861 billion, down from EUR 29.292 billion in January.
In the 12 months to February 2009, the trade balance showed a cumulative deficit of EUR 56.3 billion, a 39-percent increase from a cumulative deficit in the 12 months to February of 2008.
But Law noted that "the pace of the decline in exports has begun to ease, which means that we are nearing the bottom and that a technical rebound is possible over the next few months."
The finance ministry said that after sharp falls in January, deliveries of French aerospace equipment were showing a "clear improvement" while sales of "refined petroleum products were picking up."
At the same time, exports from the French auto sector had "stopped their decline".
Analysts at Xerfi nonetheless cautioned that sales of French goods in the United States remained "extremely weak" in the face of crumbling US investment and consumption.
They also pointed to a sharp downturn in trade with two of France's principal clients, Britain and Spain.
Imports have meanwhile begun to stabilise as well, falling to EUR 32.968 billion in February from EUR 33.006 in January, according to the finance ministry, which noted in particular weaker purchases of Chinese clothing products.
If France is importing less, "it's because households are paying attention to their expenditures while enterprises have frozen investment and the purchase of new machinery," Law said.
AFP / Expatica