France's trade deficit hit a record €55.7 billion ($71.35 billion) in 2008, hit by high oil prices early in the year and by the impact of the economic crisis on major trading partners, data today showed.
The French customs office said the seasonally adjusted trade deficit for December surprisingly narrowed to €2.45 billion from a revised deficit of €6.02 billion in November, well below the expectations from economists polled by Reuters who forecast a deficit of €5.7 billion.
December exports of €31.3 billion were given a boost by record sales of Airbus aircraft to the value of €2.1 billion and the €555 million sale of an ocean liner, which are unlikely to be repeated in later months.
A drop in imports to €33.8 billion from 37.1 billion in November, due mainly to a 20 per cent drop in oil and gas purchases, also pointed at problems in the rest of the economy, which is expected to tip into recession in 2009.
“December looks like an improvement but it's an illusion,” said Alexander Law, chief economist at Paris-based consultants Xerfi. “Exports are up, thanks to an ocean liner and Airbus but those are exceptional.”
“As for imports, their drop is the sign of an economy in recession. The less we consume, the less we produce and the less we import,” he said.
High oil prices in the earlier part of 2008 were mainly responsible for the sharp widening of the deficit from €40.6 billion in 2007, with 80 per cent of the difference down to energy costs, Trade Minister Anne-Marie Idrac said.
Idrac put a brave face on the record 2009 deficit, saying the easing in the euro against the dollar and lower oil prices “should improve things and facilitate a much more favourable (trade) position than in 2008”.
But Friday's data showed the impact of the economic slowdown on France's main EU trading partners, a market which accounts for nearly two-thirds of exports and which in December were at their lowest level since May 2004 at just over €18 billion.
Car sales to other countries in the bloc have suffered particularly badly as demand has fallen off this year and the sector fell into deficit for the first time in a decade.
Reuters