Trade deficit: three questions to understand why France continues to plunge

To touch the bottom, but still dig. Since 2020, the deterioration of the French foreign trade balance has become the rule, and tends to get worse and worse. This Friday, October 7, customs confirm, in a report, the bad French trend, victim of the international situation but also of its own weaknesses.

Over one month, the deterioration of the French trade balance deteriorated by one billion euros, ie a record drop over one month. While in July it amounted to 14.5 billion euros, it is 15.5 billion in August. Customs reveal that imports increased by 1.1 billion euros while exports only increased very slightly (0.1%). The former reaching a total of 65.6 billion euros and the latter 50.1 billion, the differential is indeed 15.5. And while the deficit was 85 billion for the whole of 2021, the government expects a total of 156 billion for the year 2022, and 154 billion for 2023.

The drastic rise in the price of energy - due to the war in Ukraine - is the main cause of this poor balance. In August, France's energy bill reached 11 billion euros, or 800 million more than the previous month. "Imports of gas and electricity continue to increase significantly," the report said, at 28% in August against 27.3% in July.

Beyond the subject of energy, the balances of trade in intermediate goods, investment and consumption are also decreasing together, which tends to prove that France is struggling to find outlets. If we remove energy expenditure, the trade balance remains very weak, standing at -6.7 billion euros. Admittedly, the balance of trade in consumer goods fell less in August than in July (0.1 billion in August against 0.2 billion in July), but the balance of trade in capital goods, stable in the month of July has decreased. Finally, the balance of intermediate goods – that is to say goods which are acquired to be transformed into other goods – deteriorated by 0.2 billion euros.

The global economic situation, which is proving to be very bad - the World Trade Organization is counting on a virtual stagnation in world trade in 2023 - cannot on its own explain these poor results. French exporters are struggling to sell their products, the result of the deindustrialization policy pursued for many years by France. In many industrial fields, France sells mid-range products at high prices.

Interviewed last May by L'Express, Christophe Lecourtier, CEO of Business France, nevertheless believed that government measures were making "France more attractive, citing in particular the "France Relance" and "France 2030" plans. A report from consulting brand PwC Strategy