French Trade Deficit Widens to Record EU4.7 Billion

By Helene Fouquet

July 9 (Bloomberg) -- France's tradedeficit widened in May to a record as the stronger euro and slowing economic growth led to a decline in exports.

The deficit rose to 4.74 billion euros ($7.45 billion) from a revised 3.74 billion euros in April, the Trade Ministry in Paris said today. Economists expected a shortfall of 4 billion euros, according to the median of 12 forecasts in a Bloomberg News survey

Slowing growth across Europe in the second quarter is hurting demand for French exports, already suffering from the 7.3 percent increase in the euro this year. Manufacturers are also suffering from the fallout of the doubling in crude oil prices in the past year that is raising production costs and leaving French consumers with less to spend.

Europe's third-biggest economy will grow 0.2 percent in the second quarter, the least in almost two years and a third of the pace in the first three months, Paris-based statistics office Insee predicted. The economy will stagnate in the third quarter and grow 0.2 percent in the final three months of 2008, Insee said.

Exports in May fell to 34.7 billion euros from a revised 35.3 billion euros, with the U.S. leading the decline. Imports rose to 39.5 billion euros from a revised 39.1 billion euros in April.

Airbus Sales

German exports also declined, falling 3.2 in May from the previous month, the biggest decline in almost four years in May, a separate report said today.

Airbus SAS, the world's largest planemaker, said on May 28 orders for its A380 superjumbo may be one-third lower than previously predicted this year as higher fuel costs and the economic slowdown dent demand for travel. Airbus sold 20 aircrafts in May for 831 million euros, down from 22 planes in April for 1.1 billion euros.

Crude oil has gained 48 percent this year, reaching a record $145.85 a barrel on July 3, fueling the fastest inflation in France in 12 years. The surge in prices is sapping consumer confidence and economic growth.

French Finance Minister Christine Lagarde, who said Insee's growth forecasts were ``on the pessimistic side,'' expects the economy to expand between 1.7 percent and 2 percent this year, down from 2.2 percent in 2007.

To contact the reporters on this story: Helene Fouquet in Paris at Hfouquet1@bloomberg.net.