The sharp drop in energy prices is bringing a welcome breath of fresh air to French foreign trade. France’s trade deficit fell by nearly 12 billion euros in the first quarter of 2023 compared to the previous three months. However, it remains at the very high level of nearly 30 billion euros over the period, according to data published on Tuesday by Customs. A figure clearly “more degraded than that recorded over the period 2000-2020”, they underline.
While the surge in gas and oil prices as well as the strong dollar had led last year to the worst trade deficit recorded by France – i.e. 164 billion euros -, a slight improvement is observed: over one year sliding, the “hole” is reduced to 160 billion. At a time when domestic demand is stalling, foreign trade even made a positive contribution to GDP in the first quarter. France is reducing its deficit both with the European Union and with Asia.
Reduction of the energy bill by 10 billion
At the start of the year, however, the improvement in the external accounts owes above all to the deflation in the price of oil – the barrel lost 13% – and gas as well as the reduction in imported volumes. At the same time, the restarting of part of the nuclear reactors combined with the drop in consumption have enabled France to reduce its electricity purchases. Ultimately, the energy bill fell by 10.3 billion euros compared to the fourth quarter of 2022.
This contributed to lower imports. Including military equipment, these continued to decline (-7.4%) to return to 187 billion euros over the period. However, France also reduced its purchases of manufactured goods (-2.6%).
Exports also fell, but by only 1.6% to settle at 151.2 billion in the first quarter. France suffered from the decline in volumes and prices of wheat sold abroad. This plunged the balance of agricultural products into the red (- 900 million).
Exports of “other industrial products” also decelerated, mainly penalized by the decline in international sales of energy-intensive sectors, metallurgical and metal products (wood, paper, cardboard, etc.). Ultimately, however, the deficit in manufactured goods fell by 3 billion to 16 billion.
The month of March confirms the upturn with a deficit reduced to 8.4 billion euros, i.e. “its level the least degraded for more than a year and a half”, according to Customs, which also saw a sharp drop in the trade deficit in February, to 9.9 billion instead of 11 billion. “In March, all the major components of France’s trade balance improved,” said Customs.
France can also boast of an improvement in the balance of services. In the first quarter, its surplus amounted to 10.2 billion, after 9.4 billion in the last three months of 2022, according to the Banque de France.