French July Trade Deficit Shrinks From Record in Previous Month

By Sandrine Rastello and Francois de Beaupuy

Sept. 10 (Bloomberg) -- France's tradedeficit narrowed in July from a record as slowing economic growth led to a decline in imports of goods such as oil and cars.

The trade shortfall shrank to 4.83 billion euros ($6.8 billion) from $5.36 billion euros in June, the largest ever, the Trade Ministry said in Paris today. Economists had expected a deficit of 5 billion euros, according to the median of 11 forecasts in a Bloomberg News survey.

The trade balance may worsen because French exporters, who have been facing the consequences of a euro that traded as high as $1.6038 in July, are now grappling with an economic slowdown in the euro region, where they do most of their business. The French economy contracted 0.3 percent in the second quarter, with trade shedding 0.5 percentage points from growth.

``The good news should be tempered,'' Cedric Thellier, an economist at Natixis in Paris told Bloomberg Television. ``One- third of France's exports go to Germany, Italy and other European countries that are also facing a major economic slowdown.''

Exports rose to 34.97 billion euros from 34.86 billion euros in July, while the slowdown in Europe's third-largest economy meant imports fell to 39.8 billion euros from 40.22 billion euros. Imports of oil products and cars fell.

``There's a weakness of French trade and the euro's depreciation over the past weeks is not going to have a positive effect before the end of the year,'' said Gilles Moec an economist at Bank of America in London. ``French exporters are not well positioned on markets that pull growth, such as Asia's emerging economies or eastern Europe.''

Airbus SAS said it sold 27 airplanes in July for 1.19 billion euros.

To contact the reporters on this story: Sandrine Rastello in Paris at srastello@bloomberg.net;