French Trade Deficit Shrinks

The French trade deficit contracted to 9.95bln euros in March from 11.37bln euros in February.

French exports show more resilience than imports, but they have a complicated trend in play. Exports rise by 9.5% over 12 months, fall at a 6.5% annual rate over 6 months and edge up at a 0.7% annual rate over 3 months. This semi-weakening profile is still considerably stronger than for imports.

Import trends are simply decelerating progressively. Imports fall by 2.4% over 12 months. They fall at a faster, 29.4% annual rate over 6 months, and then they fall at an even faster 36.7% annualized rate over 3 months. The import picture in France is much more worrisome than for exports, but there also are special issues there.

As for components, exports show a consistent but not uniform pattern of the various flows advancing over 12 months, contracting over 6 months then rebounding over 3 months. The ‘other’ category is the exception to this set of trends.

Imports show a consistent withering trend overall that is echoed by two of the three components as ‘food’ and the ‘other’ categories show steady deceleration. Transportation equipment imports decelerate sharply from 12-months to 6-months then reduce their rate of contraction over 3 months. The sector is still weakening but not at progressively faster rates of change.

French imports may have been impacted by the political difficulties and demonstrations in France that have battered the economy in the wake of President Macron’s decision to raise the retirement age, an action that has been vigorously opposed by repeated nationwide demonstrations. The opposition to this change has been so great that the President has had to travel with his own generator as protestors have taken to cutting the electrical service any place that he stops.

Of course, in addition to political issues, France also is afflicted with high inflation, as a euro area member. It is also dealing with fallout from the Russia-Ukraine war. Globally economic conditions have been slowing, although that slowing process has been interrupted by an unexplained rebound in recent months. The upshot of all this for French trade is that French exports have held up better than French imports and those trends will bear watching to see if the problem has been the temporary interruption of politics or a more substantial easing in underlying growth.