French October Trade Deficit Widens to Record

By Helene Fouquet

Dec. 9 (Bloomberg) -- France’s trade deficit widened to a record in October as the global economic slowdown hurt exports.

The trade gap expanded to 7.07 billion euros ($9.1 billion) from a revised 6 billion euros in September, the Trade Ministry said in a statement today. The deficit expanded more than the median forecast of 5 billion euros in a survey of eight economists by Bloomberg News.

“There is nothing really that can help the trade balance these days, not even falling oil prices,” said Olivier Bizimana, an economist at Credit Agricole SA in Paris. “The trend for exports is downward and with domestic demand falling, imports are also dropping.”

France’s trade balance worsened as exporters grappled with the economic slowdown in the euro region, where they do 72 percent of their business. The French economy, which unexpectedly grew in the third quarter, may fall into its first recession since 1993 next year, according to the Organization for Economic Cooperation and Development, and the euro region slipped into recession in the three months through September.

Exports from Germany, Europe’s largest economy and France’s biggest trading partner, also fell in October. French consumers imported fewer goods from their neighbor and also exported 389 millions euros less to Germany in October, to 4.6 billion euros.

Contractions

Since the beginning of the year, the French trade deficit has piled up to 46.2 billion euros, more than the 30.3 billion- euro deficit for the same period last year. In the past 12 months, the deficit broke records to 5.2 billion euros.

The economy of the 15 euro nations, which together take 60 percent of France’s exports, will probably expand just 0.1 percent next year after growing 1.2 percent in 2008, the European Commission said on Nov. 3. The International Monetary Fund predicts economic contractions in the U.S., Japan and the euro region in 2009. The ECB lowered its benchmark by three- quarters of a percentage point to 2.5 percent, the biggest cut in 10 years.

Exports fell to 32.6 billion euros from a revised 34.1 billion euros in September, while imports dropped to 39.6 billion euros from a revised 40.1 billion euros.

Airbus SAS said it sold 27 airplanes in October for 1.5 billion euros.

The decline in the price of crude oil, down about 70 percent from a record in July, didn’t compensate for the global economic slump to bring French trade back to balance. Energy imports dropped 245 million euros in October to 7.2 billion euros. Car exports and imports slipped as well.

“The news is rather bad,” Philippe Waechter, an economist with Natixis Asset Management in Paris, told Bloomberg Television. “We are in a phase where demand is mediocre.”

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net