Soaring electricity imports plunge France’s trade deficit

Posted Nov 8, 2022, 11:06 AMUpdated Nov. 8, 2022, 2:28 p.m.

It has become a sad habit for the Customs administration. Each month, it announces a further deterioration in France’s trade deficit. September is no exception with a deficit of 16.8 billion euros, higher than that of August which was revised upwards to 15.9 billion euros.

Over the whole of the third quarter, the trade deficit “deteriorates by 7.3 billion euros compared to the previous quarter to reach 47.6 billion”, indicate the Customs. And to specify that the French trade deficit is widening “for the seventh consecutive quarter”.

Over one year, the deficit is already around 150 billion

Over twelve months, the hole in foreign trade now climbs to 149.9 billion euros. And is getting closer and closer to the threshold anticipated by the government for the whole of 2022, with a great risk of exceeding it. A historic deficit of around 200 billion euros this year is even possible from now on if the current rate of deterioration continues.

According to the finance bill for 2023, the French trade deficit should reach 156 billion euros this year. That is a little less than double that of 2021 (85 billion), which was already a record. And, still according to the executive’s projections, France would do little better next year, at 154 billion according to the PLF.

The reasons for the repeated poor performance of French foreign trade are well known. In deficit for nineteen years now, it has accentuated its plunge with the soaring energy bill, the slowdown in world trade and the depreciation of the euro against the dollar.

Electricity purchases soar by 178%

But it is obviously the energy bill that weighs the most. The growth in imports this quarter, which reached 207.5 billion euros (up 8%), “is half due to energy (+20.6%), whose bill has continued to rise uninterruptedly since fourth quarter of 2020”, detail the Customs.

This increase in the energy deficit, which represents 7.3 billion over the quarter, is, “unlike the two previous quarters”, driven “mainly” by electricity whose purchases, mainly made from the United Kingdom, Spain, Germany, Belgium and Switzerland soared by 178.3% over the quarter. The electricity balance is thus in deficit by 4.8 billion euros (down by 4.2 billion). A result largely linked to the fact that more than half of nuclear reactors are shut down, either for maintenance or because of work relating to corrosion problems. But also because of the sharp increase in the price of gas, on which those of electricity depend, on the European market.

By comparison, the 13.7% increase in hydrocarbon purchases could almost appear modest in a context of declining prices.

Non-energy imports are also on the rise. Purchases of manufactured products increased by 5.2%, driven in particular by those of supplies of transport equipment (+13.1%). And more particularly in the automobile (+11.8%) but also, “to a lesser extent”, in aeronautics.

A record agricultural surplus, driven by wheat

On the export side, the situation is quite different. Up 5.1% over the quarter (to 153.1 billion euros) “they continue to grow at a rate close to that at the start of the year”. And are always more dynamic than those of our German, Spanish and Italian neighbours. This allows a stabilization of market shares, after a series of declines.

Excluding military equipment, “more than three quarters of the increase in exports are driven by manufactured products”, specify the Customs. And in particular transport equipment which benefits from a “strong rebound” (+24.5% after -5.3%) in aeronautical sales. Those of the automotive sector also increased (10.1%) and returned to their pre-crisis level.

Agricultural exports are also very well oriented. They recorded an increase of 24.2%, described as “unprecedented since 2009” by Customs. In fact, “driven by high wheat prices and less competition from Ukraine, sales of agricultural products reached a record level”, which also led to a record agricultural surplus of 2.2 billion euros in the third trimester.

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