“Foreign trade contributes positively to GDP growth,” noted INSEE at the end of July when it unveiled the figures for French activity in the second quarter. The deficit in the balance of goods in fact experienced a spectacular recovery over the first six months of the year. According to data published on Tuesday by customs and the Banque de France, the half-year deficit amounted to 54 billion euros against nearly 90 billion euros in the second half of 2022, thanks to exports down slightly by 0, 8%, but above all a plunge in imports of 9.4% over the period.
News “with regard to foreign trade for once rather positive”, comments Olivier Becht, the Minister Delegate for Foreign Trade. It points to the 9.2% increase in the number of French exporting companies since 2021, which now stands at 147,900. The objective of 200,000 in 2030 seems achievable. Similarly, France regained global market share in value, going from 2.5% at the end of 2022 to 2.8% for goods in the first quarter of 2023.
Again, the vagaries of French foreign trade can be explained almost in a single word: energy. “In 2022, 50% of the trade balance deficit was explained by energy,” notes Jacques Percebois, economist at the University of Montpellier and specialist in the subject. Over the past year, the price of gas in particular had multiplied by more than ten, from around 30 euros per megawatt hour to 345 euros in August, when Russia threatened to cut European supplies.
This period coincides with the multiplication of shutdowns on the French nuclear fleet, making Paris an importer of electricity “ for the first time in more than forty years”, recalls Jacques Percebois, who estimates the cost at around 10 billion euros. France has just once again become Europe’s leading electricity exporter.
Finally, the price of oil had also reached peaks. The barrel of Brent settled at 100 dollars on average in 2022 against 80 dollars in the first six months of 2023.
The lull in hydrocarbon prices alone explains an improvement of more than 20 billion euros in the trade balance. “The energy bill is expected to increase from 65 billion euros in the second half of 2022 to 36 billion euros in the first half of the year”, explains Olivier Becht.
At the same time, the euro had lost more than 10% of its value during the turbulent year 2022, to the point of being worth just under 1 dollar last September. This had increased the price of imports, especially raw materials, all denominated in dollars. For Jacques Percebois, the depreciation of the European currency, which has since recovered, alone explains “10% of the deterioration in the trade balance”.
Despite a much more favorable economic situation than last year, the international context is still considered “complicated”, we qualify at the Ministry of Foreign Affairs. The growth of international trade should thus peak at 2% in 2023 compared to 3% per year on average before the Covid crisis – between 2015 and 2019.
Worse, the signs sent by France’s main trading partners do not lead to optimism. “Germany and UK domestic consumption is weak and the US and China are stepping up measures to benefit domestic companies,” notes Anthony Morlet-Lavidalie, economist at Rexecode.
On the export side, however, several sectors are posting good performances. Once again, aeronautics is on the first step with a surplus of nearly 16 billion euros, up 12% over the first half, and well-stocked order books.
The other source of satisfaction comes from perfumes and cosmetics. The sector brings in around 8 billion euros to France, up 7% over the half-year. At the same time, other champions such as automobiles or textiles will have a positive impact on exports.
Conversely, agriculture and agri-food are worrying. The sector saw its surplus contract by 5% due to a return to normal in the prices of agricultural raw materials, following a year 2022 marked by a surge in prices, a consequence of the war in Ukraine.
Still lagging behind in goods, France can console itself by looking at its services balance, which remains at equivalent levels in the second half of 2022 – in excess of 20 billion euros. A result judged as a “good surprise”, according to the Ministry of Foreign Affairs. If the balance remains the same, the contributors have largely evolved. Freight, which had posted record profits driven by the post-pandemic takeoff, has returned to normal. Instead, financial services and tourism – arguably near an all-time high – have taken over. By adding the balance of goods and services, as well as, among other things, income from abroad, France shows a current account deficit of 9.6 billion euros. A clear improvement compared to the hole of 39.3 billion for the second half of 2022 but far from the slight surplus generated the year before.
