French trade deficit narrows but exports continue to slide

8th December 2010, Comments 0 comments

The French trade deficit narrowed sharply in October, data showed on Wednesday, but the decline reflected exceptional strikes and disruptions and analysts voiced concern about a continuing slide in exports.

The customs authority said the shortfall came to 3.431 billion euros (4.5 billion dollars) in October from 4.378 billion in September, a decline the budget ministry attributed to strikes and economic disruption.

The ministry said the contraction reflected a drop in imports of hydrocarbons caused by blockages at several oil terminals by workers protesting government plans to extend the retirement age.

The value of energy imports as a result declined by one billion euros in October.

The value of French exports fell slightly to 32.389 billion euros from the September level.

But analyst Alberto Balboni of the Xerfi research group noted that exports had now contracted for three months running, adding that the trend was showing a "dangerous extension."

Overseas sales of aircraft, automobiles and pharmaceutical products rose. But exports of refined and chemical products declined.

The budget ministry said exports faced headwinds both in European Union and third country outlets, with a robust performance in Asia offsetting for setbacks in the Middle East and elsewhere.

"French exporters are still unable to take advantage of a strong rebound in world growth," said Marc Touati of Assya Cie financiere.

France's eurozone partner Germany on Wednesday reported a trade surplus of 14.2 billion euros in October, albeit a contraction from September.

"While the French struggle to reconnect with growth ... the Germans have found their former dynamism," Touati said.

Earlier this month the French secretary of state for foreign trade, Pierre Lellouche, painted a somber picture of the country's overseas commercial prospects.

"The figures, honestly, are not good," he said, noting that "most of France's foreign trade is with the eurozone" and that "the number of small and medium-sized businesses engaged in exporting is insufficient and has been in decline for the last 10 years."

German exports fell by 1.1 percent in October to 86.8 billion euros on a monthly basis, but the underlying trend remained positive as the economy has also found domestic support.

The trade surplus for Europe's biggest economy narrowed to 14.2 billion euros from 16.8 billion in September, according to data released by the federal statistics office.

The value of German imports edged up 0.3 percent to 72.6 billion euros from the figure in September, the Destatis office said in a statement.

The rise in imports coincided with a pick-up in domestic consumption, traditionally the German Achilles' heel.

"The German upswing has a broader basis now, however, and is not just supported by overseas demand for German products," Commerzbank economist Ulrike Rondorf said.

© 2010 AFP

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