Airbus pushes France into record trade deficit

France slipped into its biggest monthly trade deficit ever because of weak foreign sales by aircraft maker Airbus, a cornerstone of the country's exports, customs said Wednesday. Exports fell 7.7 percent in January from December and imports rose by 2.9 percent, resulting in a record trade gap of 7.9 billion euros ($8.3 billion), the customs office said in a statement.
The figure is a setback for the French government which has been trying to improve its trade balance in the hope of creating jobs at home and rekindling sluggish growth. It comes after the trade deficit already rose by more than three billion euros in 2016 over the previous year, to 48.1 billion. The customs officer explained the January fall by "extremely low Airbus sales". A pullback after traditionally strong end-year deliveries had always been expected, it said, "but the level of group sales is weaker than in previous months of January".
Airbus delivered just 25 aircraft in January, after 111 in December. Imports meanwhile were boosted by France's rising energy bill because of higher oil prices and unusually high pharmaceutical imports. Economists warned that France may be relying too much on the aerospace sector, especially Airbus which last month reported nose-diving annual profits as charges related to problems with its A400M military cargo transport plane sent earnings into a tailspin.
"The fact that we are still very dependent (on aerospace) shows that there is a problem with our foreign trade," Axelle Lacan, an economist at Coe-Rexecode, told AFP. Government efforts to raise French competitiveness were showing some success, but not quickly enough. "For now, they're not translating into an improving trade balance or a recovery in export market share," she said. Nor were French companies managing to exploit the euro's recent weakness to push sales outside the eurozone, said Ludovic Subran, head of research at EulerHermes and Allianz.
"We're still struggling to conquer dollar zone markets such as big emerging markets like in the Gulf or Hong Kong, but also countries like the United States," he said. Some 120,000 French companies export goods, compared with 240,000 in Italy and 300,000 in Germany, Subran said. Germany, France's biggest trading partner, recorded a record trade surplus of 253 billion euros in 2016.