FR: Merchandise Trade

Fri Feb 06 01:45:00 CST 2015

Consensus Actual Previous Revised
Level E-3.1B E-3.4B E-3.2B E-3.1B

The seasonally adjusted trade deficit widened out from a marginally smaller revised E3.1 billion in November to E3.4 billion at year-end.

December's limited deterioration still left the second smallest shortfall since September 2009 and masked a 1.8 percent monthly increase in exports, their fifth successive advance, led by strength in aerospace, pharmaceutical products and intermediate goods. However, this was more than offset by a 2.6 percent rise in imports, in part due to a pick-up in energy demand. Compared with a year ago exports were up 3.7 percent while imports were off 1.4 percent.

The fourth quarter deficit weighed in at E10.7 billion, a marked improvement on the third quarter's E14.5 billion and probably indicative of a positive contribution from net exports to real GDP growth over the period. The benefits of a weaker euro and cheaper oil combined with sluggish domestic demand should help to shrink the red ink going forward.

Merchandise trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade. In France the main focus is the balance on trade in goods.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets. Given the size of the French economy, the euro can be sensitive to changes in the trade balance. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.