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The worrying worsening of France’s trade deficit

In August, the trade balance in goods was in deficit of 7.7 billion euros and 67 billion over the last twelve months. Exports only represent 83% of their 2019 average level. The risk of further deindustrialisation is real.

This is starting to do a lot. In August, France’s trade balance in goods showed a deficit of 7.7 billion euros , according to figures given on Wednesday by Customs. Over the twelve months, the trade deficit exceeded 67 billion euros in August, against 58 billion for the whole of 2019.

However, “the energy bill could decrease this year by 10 to 15 billion euros due to the fall in the price of oil. However, historically, the phases of recession lead to a decline in the price of black gold and therefore coincide with an improvement in the French trade deficit ” , notes Denis Ferrand, Director General of the Rexecode Institute.

This year, that will not be the case. Bercy even expects a trade deficit of 79 billion euros for 2020. “This is the first time that the French trade balance has deteriorated while the energy bill is falling,” points out the economist. “This is explained by a sector specialization which is unfavorable to us today,” says Denis Ferrand.

In fact, aeronautical exports amounted to 64 billion euros last year. However, over the last twelve months, they have fallen by 20 billion. Containment has been there but not only. With the Covid-19 epidemic resuming, many planes are parked on the tarmac but no longer take off. Tourism and business travel are plunging. The airline industry is not picking up.

Risk of deindustrialisation

Beyond the aeronautical sector alone , French exports are also struggling to recover. They represent only 83% of their average level in 2019. The risk of deindustrialisation of the country is therefore very real. Imports took off faster with the increase in consumption following deconfinement. Thus, they were in August at 91% of their average level of last year. And French exports of industrial products now only represent 80% of imports of these same goods. A very low level that the country had never reached.

INSEE also estimates that the widening trade deficit will take 2 points of GDP from France this year. A study by the Paris Ile-de-France Chamber of Commerce and Industry recently indicated that imports of made-up textile articles, except clothing, which mainly include masks, increased from 64 million euros in the region to… 1.9 billion euros in the second quarter of 2020, 87% of which comes from China.

A study carried out by Customs estimated this summer that, if the health situation were to continue under the same economic conditions as in recent months, given the imports of materials to fight the pandemic, then “the trade deficit of France would increase by around 10 billion euros per year .

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