Nicolas Goetzmann is Head of Research and Macroeconomic Strategy at Financière de la Cité.
FIGAROVOX.- France's trade deficit has plunged further, to reach 84.7 billion euros in 2021 (or 3.4% of GDP), customs announced on Tuesday, February 8. An unprecedented figure. The previous record dates from 2011: the trade balance then fell into the red at 75 billion. Should we be worried about it?
Nicolas GOETZMANN.-
Customs published this figure on February 8, the same day as the publication of the American trade deficit which reached 860 billion dollars for the year 2021, a record.
From this concordance between the two countries, it is possible to draw a conclusion;
the worsening of the trade deficit is above all the result of the strength of domestic demand growth in these two countries in 2021. Between the last quarter of 2020 and the last quarter of 2021, French growth was 5.4%, against 5.5 % for the United States.
We cannot rejoice in the strength of the recovery in France while deploring its impact on the trade balance.
The main problem with this statistic is that it has become a political issue, an artificial measure of a country's economic power, which does not make much sense.
While Italy now has a GDP 5% lower than it was at the beginning of 2008, which looks like a permanent recession for more than 10 years, the country has managed to post a trade surplus during recent years.
Conversely, France has experienced growth of nearly 12% since 2008 while having a trade deficit over the entire period.
In the case of Italy, the trade surplus was caused by the collapse of domestic demand, as has been the case in several countries of the euro zone since the crisis of 2008. In this case , he is not'
Read alsoTrade deficit: French multinationals singled out for lack of patriotism
The most widely used example, still from a political point of view, is that of Germany and its record trade surplus built up since the birth of the euro zone.
What is less known is that France has experienced stronger growth than Germany since that date, that is to say since 1999.
Having been in deficit for almost twenty years, the French trade balance today makes our country the worst student in Europe. What have successive governments done over the past 20 years?
The strategy is always the same, that of competitiveness, which has turned out to be completely ineffective in a European environment where everyone is doing the same thing.
It is very healthy to ask the question of our responsibility in this process, but it should not be forbidden to wonder about the fact that France is surrounded by "partners" who seek to take advantage of the growth of other countries to support their exports.
France plays the role of consumer of last resort in the euro zone economy here, just as the United States plays the same role at the global level.
The fact is that the global economy suffers from a lack of “demand” and from excess savings, which is confirmed by low interest rates.
All countries want to produce a maximum of things while doing their best to consume a minimum in order to post a positive trade balance.
These behaviors cause serious imbalances and are the source of the trade clashes we have seen in recent years.
We have a first group of countries which plays the role of the consumer, the United States, France, and the United Kingdom, and another group represented by China and Germany which surf on the growth of their "partners" .
Nicholas Goetzmann
We have a first group of countries which play the role of the consumer, the United States, France, and the United Kingdom, and another group represented by China and Germany which surf on the growth of their "partners" .
If Germany and China consumed up to their capacity, then the balances of other countries, including France, would automatically return to a more favorable position, while mechanically becoming more competitive.
Because if these countries began to pay their employees at a level consistent with their productivity, which would simply be "normal", then France would find itself relatively more competitive than it is today.
Is the weakness of our foreign trade a reflection of the weakness of our domestic economy as asserted by Bruno Le Maire? In what ?
For 2021, it is rather the opposite, it is the strength of the recovery that best explains the situation.
But this sentence from Bruno Le Maire concerns the industrial question.
It is clear that the pandemic has particularly affected French industry since key sectors such as aeronautics have been hit hard.
We can also cite the expenditure of foreign tourists in France, which are counted as exports of services, which have been particularly affected.
It is clear that our commercial situation also reveals an industrial weakness whose causes are multiple...
Nicholas Goetzmann
It is clear that our commercial situation also reveals an industrial weakness whose causes are multiple;
from the level of relocation exercised by French multinationals, to the behavior of our neighbors as solitary riders, and by the lack of an industrial strategy over the last few decades.
In this situation, is budgetary rigor a priority? What are the possible solutions?
Mechanically, a budget surplus would have the effect of increasing the country's overall level of savings, and therefore the trade balance, as was the case in Germany during the 2010s. But in the absence of growth, this strategy is doomed to failure, especially since France is an attractive country that attracts foreign investment.
However, the strength of foreign investment is a source of the French trade deficit, as is the case in the United States.
This accounting situation should make us understand that if France were in an extremely favorable position for growth and attractiveness, it would probably have a trade deficit, and this, mechanically.
The search for a trade surplus at all costs is a dangerous strategy because it can have the objective of lowering expenditure, lowering wages, which will cause a general economic weakening.
Conversely, a long-term growth strategy coupled with a desire to exert pressure on the aggressive strategies of our partners would result in France posting better growth,
