France's trade balance remained negative at minus 6.54 billion euros in January 2025, with exports plunging to 49.8 billion euros and imports rising to 56.4 billion euros. The deficits are due to a slightly weakened energy trade balance of minus 0.1 billion euros, marking the first setback since June 2024. This decline was counterbalanced by an increased trade balance for manufactured goods (0.1 billion euros), suggesting that export growth in this sector helped stabilise the overall deficit.

Investment goods continued their upward trajectory, with a 0.2-billion-euro improvement, building on December's 0.4-billion-euro gain. In contrast, intermediate goods saw a slight decline (minus 0.1 billion euros), potentially signalling reduced demand for raw materials and semi-finished products. Meanwhile, consumer goods remained at the same level as December 2024, indicating steady domestic and international demand.

While France's trade deficit persists, the resilience of manufactured and investment goods provides a positive outlook. However, the energy sector's volatility and slowing intermediate goods trade highlight potential risks that could shape future economic performance. This latest update leaves the RPI at minus 14 and the RPI-P at minus 10, meaning that economic activities are slightly behind market expectations of the French economy.

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.