Charts of the Week

France: improvement in services surplus offsets deterioration in goods deficit


France has reported a structural deterioration in the trade balance for goods since 2015. In January 2022, the deficit swelled to a record high, at a cumulative 12-month total of EUR 73 bn according to the Bank of France’s balance of payments statistics (EUR 88 bn according to the definition used by the customs office1). The trend for the industrial goods deficit to swell has accelerated since 2020 with the decline in aeronautics exports since the beginning of the Covid-19 pandemic. The deterioration observed since November 2021 is mainly due to higher oil prices.

Yet the current account balance, which combines all of France’s foreign trade2, draws a different picture: the cumulative 12-month deficit was limited to EUR 23.4 bn in January. Moreover, it has remained relatively stable, even over the past three months.

France: decomposition of the current account balance

This is mainly due to the trade surplus in services. It also reached a record high with a cumulative 12-month total of EUR 39 bn in January. The net increase since early 2021 can be attributed to the “transport” component, which swung into a surplus with the outbreak of the Covid-19 pandemic. Moreover this surplus has increased ever since, to a cumulative 12-month total of EUR32 bn at the end of January. Detailed IMF data available through Q3 2021 show that the improvement up to that point corresponded essentially to maritime freight export services, at a time when strong global demand was bolstering maritime transport.

1 In the balance of payments statement, transport and insurance costs that the customs office incorporates under merchandise trade are incorporated as trade in services, which tends to reduce the goods deficit. Moreover, according to the customs office definition, goods are traded if they cross a border, while the balance of payments definition uses a residency criteria: trade flows are incorporated if the trade is conducted between a resident and a non-resident.

2 The current account balance comprises goods, services and revenues (notably interest flows and profit and migrant remittances).

Stéphane Colliac
Team : OECD economies