French Trade Deficit Widens to 5.38 Billion Euros

By Ladka Bauerova and Flavia Krause-Jackson

Oct. 8 (Bloomberg) -- France's trade deficit widened in August, pushing the shortfall close to a record, as some of the country's biggest trading partners slid toward recession, hurting exports such as cars.

The trade shortfall swelled to 5.38 billion euros ($7.3 billion), from a revised 4.92 billion euros in July, the Paris-based trade ministry said in an e-mailed statement today. The shortfall reached a record of 5.4 billion euros in June.

Some of the biggest buyers of French goods, such as Italy and Germany, may be heading into a recession this year as the financial crisis spreads and stock markets tumble. Manufacturers were already struggling to cope with higher production costs and slumping consumer demand triggered by oil prices rising to a record in July.


Bayerische Motoren Werke AG, Ford Motor Co. and Renault SA all said last week that a slump in car sales may be more prolonged than manufacturers have anticipated. Auto sales fell 16 percent in August, the biggest monthly decline since 1999.

Imports rose 1.8 percent in the month to 40.67 billion euros, outpacing the 0.8 percent increase in imports to 35.29 billion euros, Insee said.

France's own economy, the second largest of the 15 countries sharing the euro, probably slipped into recession for the first time in more than 15 years in the third quarter, according to the national statistics office. Gross domestic product shrank 0.1 percent in the third quarter after a contraction of 0.3 percent in the previous quarter, Insee estimated on Oct. 3. The government sees growth this year and next of around 1 percent.

The central government's budget deficit at the end of August widened to 67.6 billion euros from 63.8 billion in the same period last year, the Budget Ministry said in a separate report.

To contact the reporter on this story: Ladka Bauerova in Paris at lbauerova@bloomberg.net.