How did the economy of France go in 2021
Because France has to pay the worst trade deficit ever. The article by Andrea Mainardi
The commitment made by the French government in recent weeks limits the insane increase in the energy bill in France more than in Italy, protects families and entrepreneurs and directs the political debate in the presidential elections in April to some extent. But the data published on Tuesday by the Directorate General of Customs mark an expected and no less dramatic record. While growth of 7% is recorded on the other side of the Alps, the trade balance discovers a deficit in 2021 – the worst ever -, at 84.7 billion euros (or 3.4% of GDP). Compared to 2020, when it reached 64.2 billion euros, the trade deficit has widened by about twenty billion. A trade deficit that has been advancing for years and is slowly eroding the French economy.
“It will take ten years to reduce this foreign trade deficit”, the Minister of Economy, Bruno Le Maire, confided in early January, warning of the tsunami certified yesterday. The latest data confirms the scale of the task, with the picture of a hole more than 30% larger than that seen in 2020. It is true that the surge in energy prices partly explains the deterioration in conditions. But even without this, the situation is dramatic. The manufacturing deficit continues to increase year after year, as the industrial fabric is less and less able to meet the needs of domestic demand and the global market. Even in sectors where the French were once world champions, such as agriculture, performance is declining.
Trade deficit (unprecedented) of almost € 85 billion. Hypothesis in the energy emergency
Behind the short-term reasons there are structural explanations, analysts agree: those of a country with strong services and weak industry.
Crucial, there as everywhere, the price of the energy bill, which went from 25.2 billion euros in 2020 to 43.1 billion in 2021. But the increases in the same period affected other countries, without their trade balance deteriorating as much . The worsening of the deficit is detailed "with a more marked rebound in imports (+ 18.8% after -13% in 2020) than in exports (+ 17% after -15.8%)". Preferring to observe the glass half full, Franck Riester , Secretary of State for the Economy, with responsibility for foreign trade, recalls a "record surplus in services, at 36.2 billion euros".
Aeronautics and agri-food: sectors that are good for export. But not enough
The aviation industry remains internationally oriented, as do the wine, grain and dairy sectors.
Aeronautics, the leading French export sector, was penalized by the pandemic, with a trade balance below the record level of 2019 (19.7 billion euros, compared to 30.8 billion). It remains one of the main French exporters, yet it does not give the expected performance. It only returned to 57% of the level before the health crisis. In terms of civil aviation, French customers weigh little in Airbus and Safran's orders. Safran indicates that in 2020, despite Covid, 80% of its $ 16.5 billion in revenue was made outside France. The vast majority of the 10,300 engines already in its order book will power aircraft of foreign airlines. On the Airbus side, the share of exports is even greater: over 95% of its commercial aviation business is generated by foreign customers. In 2020, despite the pandemic, Airbus achieved revenues of $ 49.9 billion, up from $ 70.5 billion the previous year. In 2021 it delivered 611 aircraft, of which only 12 to Air France-KLM.
In the agri-food sector, the wine and spirits sector is intoxicating. Sales of cognacs increased by 30% in 2021. Le Monde writes: "the turnover of Champagne also reached a record level of 5.5 billion euros, of which more than half obtained outside the borders".
The increases in the export of perfumes and cosmetics (+ 111%), luxury (+ 115%), agri-food (+ 109%), textiles (+109%) are smiling.
At half mast, almost over the ridge, more towards the ravine, car exports
The 7% growth and the pandemic emergency, says the secretary c Riester, has then increased imports, especially from China, in the health care or electronics sector.
Reindustrialize en marche!
In a report published in early December, the High Commissioner for Planning, François Bayrou, noted that 74% of French exports (in value) are made by the industrial sector, amounting to € 468 billion in manufactured goods. in 2019. "Despite these results, the manufacturing industry alone has a trade deficit of over 51 billion euros," laments Bayrou. "The deindustrialisation of France has certainly contributed to aggravating our trade deficit," noted Guillaume Vanderheyden, Deputy Director of International Trade at the Directorate General of Customs in January.
Crucial step, reindustrialisation.
A phenomenon that has long been tried to reverse.
Without sensational successes. Challenge of the first magnitude for presidential candidates. Today everyone is arguing that France must be reindustrialized. But the difficulty is obvious. Over time, governments have focused above all on policies of general reduction of taxes and contributions to reindustrialize the country and therefore reduce the trade deficit. In the present, of the 100 billion of the latest recovery plan (the France Relance), 34 billion are earmarked for the purpose, 20 for the reduction of production taxes.
"There are no other solutions to restore France's foreign trade balance than to massively and quickly reindustrial our country," Minister Le Maire commented yesterday to France Inter.
The entrepreneur and analyst Francis Journot denounces the political choices that have accelerated the industrial decline of France since the 1970s and does not believe in the ability of the presidential candidates to reverse the trend: "Valérie Pécresse and Emmanuel Macron probably have no intention of reindustrialize France, above all because a massive plan would be impossible in the European context ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/francia-economia-deficit-commerciale-2021/ on Thu, 10 Feb 2022 07:07:52 +0000.