FR: Merchandise Trade

Fri May 04 01:45:00 CDT 2018

Actual Previous Revised
Level E-5.26B E-5.19B E-5.19B

The seasonally adjusted trade balance was in a E5.26 billion deficit in March after a slightly smaller revised E5.05 billion shortfall in February.

The deterioration reflected a modest 0.4 percent monthly rise in exports where gains in pharmaceuticals more than offset a fall in aeronautical products. However, March's rebound failed to fully offset the 0.7 percent decline in February and the latest reading was still more than 4 percent short of the peak reached in December. Imports were up a sharper 0.8 percent, in large part due to an increase in aeronautical supplies.

The March data put the first quarter red ink at E14.06 billion, a near-11 percent deterioration versus the fourth quarter. Total net exports are provisionally estimated to have had a neutral impact on quarterly real GDP growth at the start of the year. This followed a 0.7 percentage point boost at the end of 2017 and did much to account for what turned out to be a marked slowdown in economic growth.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness.

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.