France's trade deficit soared in the second quarter: the recovery in domestic consumption after confinement caused imports to pick up again while exports remain weighed down by a sluggish global market, following the Covid-19 pandemic .
Reaching 20.4 billion euros in the second quarter, this negative balance of the trade balance is close to the record level of 2011. It increased by 6.9 billion compared to the first quarter of 2020, indicated the Customs in a statement released Friday.
Exports plummeting, consumption picking up again in June
In the second quarter, exports plummeted 28.9% compared to the first, after a 7.3% drop in the first quarter compared to the previous one. Imports fell 20.7% over the same period, after falling 6.4% between January and March.
A positive sign of a rebound, household consumption in France was stronger in June than before the coronavirus crisis, after a sharp decline during confinement, according to INSEE. While in the United States, for example, household consumption expenditure in May was still 11% below its pre-crisis levels, despite a large monthly increase.
The rise in imports, a consequence of the recovery
For the president of the French foreign trade advisers, Alain Bentejac, the policies of stimulating the economy by demand generally cause a deterioration in the trade balance.
"The recovery in consumption is a good thing, obviously, but this translates into an increase in imports, while France has more difficulties in increasing its exports because of its industrial specialization, particularly in aeronautics", sector strongly affected by the Covid-19 crisis, notes Alain Bentejac.
Trade with the EU is holding up
Customs indicate that "nearly half of the drop in exports is explained by the fall in the transport sector (-59.9%)": exports of aeronautical and space products continue to collapse (-64, 2% in the second quarter) and those of automobiles, equipment and boats also contributed to this contraction.
Trade with the countries of the European Union (trade deficit widened by 0.4 billion euros), however, held up better than with other zones, notably China, with which the gap between imports and exports s 'is increased by 3.1 billion euros. "The main stake in international trade for France is Europe, therefore a deteriorated trade balance of 0.4 billion euros, it is rather good news, it means that there is no had a sharp deterioration in the competitiveness of French products on European markets, ”Alain Bentejac analyzes.
The massive importation of protective masks from China and the drop in clothing exports worsen the balance of the textile and clothing sector. While in China, while exports surged unexpectedly in July, the decline in imports does not bode well for solid demand.
Stimulus plan on August 25
To help exporting companies, the government has implemented exceptional measures as part of the emergency plan launched in March. "They were thus able to benefit from enhanced support by the France Export Team and by export credit insurance schemes", specifies the Quai d'Orsay.
The State intends to restart exports by means of specific measures, integrated into the government's stimulus plan which will be presented on August 25.
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