PARIS (AFP) — France is on track to post a record trade deficit in 2007, following a huge surge in the shortfall in November that threatens to weigh heavily on prospects for the French economy.
News of a sharp 32-percent widening in the defict in November compared with the October figure came as Germany, a key French trading partner and the eurozone's largest economy, reported a gain in its trade surplus to the highest point since reunification in 1990.
The data led analysts and officials to warn that France was suffering from an underlying fall in competitiveness, a point frequently made by commentators as the trade and balance of payments figures have worsened over the last two years.
The French customs authority said the November trade deficit came to 4.792 billion euros (1.7 billion dollars) from 3.626 billion in October.
It said that in figures corrected for seasonal variations exports fell to 33.304 billion euros while the value of imports rose to 38.096 billion.
"We are heading for a record deficit this year (2007)," warned economist Nicolas Bouzou of the research group Asteres, predicting an annual reading of 41 billion euros after a record 28.192 billion in 2006.
At Xerfi, a market research unit, analyst Alexander Law said "the French economic situation is now critical." He described the November trade figures as "an alarming signal."
He said the economy was now likely to have expanded a "microscopic" 0.1 percent in the fourth quarter of 2007, putting annual growth at 1.8 percent -- a far cry from the government target of 2.0-2.5 percent.
"What is worse is that the first three months of 2008 are not likely to be any better. Our forecast of growth of 1.4 percent for this year appears almost optimistic."
Bouzou of Asteres argued that the dismal November performance could not be blamed on high energy prices alone, as imports of industrial goods also rose, nor on the subprime housing market crisis in the United States.
The appreciation in the euro cannot furthermore be singled out as a "scapegoat," he maintained, as exports to the European Union were stagnant while the value of imports increased.
"The November figures reflect a loss of competitiveness that is intrinsic to French industry."
Bouzou acknowledged that a slowdown in the world economy was a factor in the November trade deficit but added: "In the case of France, its foreign trade problems pre-date the start of the global slowdown."
France's secretary of state for trade, Herve Novelli, said the widening in the November deficit revealed "industrial and structural problems."
The research institute Coe-Rexecode has determined that "the position of French exports in global trade has declined in the last eight years, falling from 5.3 percent in 1999 to 4.0 percent in 2007."
For Marc Touati, head of economic research at Global Equities, "France is not sufficiently specialised in capital goods and high tech products and does not export enough to China and eastern Europe, which are high-growth areas."
"The November figures reflect a loss of competitiveness that is intrinsic to French industry."
Bouzou acknowledged that a slowdown in the world economy was a factor in the November trade deficit but added: "In the case of France, its foreign trade problems pre-date the start of the global slowdown."
France's secretary of state for trade, Herve Novelli, said the widening in the November deficit revealed "industrial and structural problems."
The research institute Coe-Rexecode has determined that "the position of French exports in global trade has declined in the last eight years, falling from 5.3 percent in 1999 to 4.0 percent in 2007."
For Marc Touati, head of economic research at Global Equities, "France is not sufficiently specialised in capital goods and high tech products and does not export enough to China and eastern Europe, which are high-growth areas."
The French finance ministry said on its website that a 600-million-euro slide in exports in November reflected "a weak level of aeronautic deliveries and an overall decline in automobile sales in the European Union."
Overseas purchases in the energy sector rose by 500 million euros over two months, the ministry added, while imports of automobiles and auto parts also increased.
Law noted that sales of Airbus, the France-based European aircraft manufacturer, totalled only 895 million euros in November, "the second worse performance since August 2006."
Germany on Wednesday said its trade surplus edged upwards in November, beating analysts' forecasts for the biggest eurozone economy.
The surplus was estimated at 19.3 billion euros (28.4 billion dollars), up from 18.9 billion in October.
Analysts polled by Thomson Financial News had expected a surplus of 17.2 billion euros in November.
Copyright © 2009 AFP. All rights reserved. More »
