Details of France's fourth quarter Gross Domestic Product were released today.The 0.65% increase in GDP for the fourth quarter reported in the flash estimate of a week ago was confirmed. It compares with a 0.87% increase reported for Germany. For the year as a whole, French GDP rose 2.0 and Germany, 2.9%. 2006 marked the first time since 1995, that Germany's annual growth rate exceeded that of France. The first chart shows the annual growth of both countries' GDPs.

In the second chart we have plotted, for France, the sum of consumption and gross fixed capital formation as a proxy for domestic demand and total gross domestic product. The difference between the two lines is roughly equivalent to France's net exports of goods and services. Until about mid 2003 France maintained a surplus on trade in goods and services. For a year or so, there was a balance and ever since late 2004, a deficit. It is this shift in the French trade balance that is largely responsible for the deceleration in French economic growth. In contrast to France, Germany has experienced an increasingly favorable balance of trade in goods since 2001, as can be seen in the third chart. (In this chart we have used the nominal figures to simplify the calculations necessary for the comparison.Real values of German net exports in billions of euros have to be calculated. The nominal values are available. While French net exports are available in both real and nominal terms, the data are in millions of euros and have to be converted into billions.)