The seasonally adjusted trade balance deteriorated again at year-end. Following November's downwardly revised €13.57 billion, the shortfall widened to €14.93 billion, a 3-month high. Although still well short of the record €17.18 billion posted in September this was some 24 percent larger than in December 2021.

The monthly increase in the red ink reflected a 0.5 percent fall in exports and a 1.7 percent increase in imports. The balance on both capital goods and intermediates worsened but the deficit on consumer goods was slightly smaller. On the year, exports were up 16.2 percent and imports 19.3 percent, the gap between the growth rates narrowing further on the back of weaker energy prices.

Over the fourth quarter, exports were flat while imports fell 4.4 percent making for a modest decline in the shortfall. This was partially reflected in a 0.5 percentage point contribution from total net exports to the period's real GDP 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.