The COVID-19 epidemic has caused an unprecedented decline in global business and trade. Like most of our international partners, France suffered a significant deterioration in its trade deficit in goods in the first half of 2020, which stood at €34 billion, compared to €29 billion in the first half of 2019 – a direct result of this exceptionally unfavourable situation.
Franck Riester, Minister Delegate for Foreign Trade and Economic Attractiveness, gave the following response:
“Unfortunately these figures are no surprise, given the exceptional scale of the crisis we’re going through. They give an idea of the energy we’ll have to put into reconquering international markets and returning to the positive trend we began in 2017, under the President’s impetus. This will be central to my activity, in liaison with the regions, businesses and all those involved in foreign trade.”
According to the Directorate General of Customs our goods exports, for example, are down by 21.5% compared to the first half of 2019 – a greater decrease than the one experienced in the first half of 2009, at the height of the financial crisis (down 20.8%). This fall is only partially offset by the decline in our imports (down 17.6%).
During the first half of 2020, our trade in goods gradually deteriorated as the COVID-19 pandemic developed, with every region of the world: first China, then Europe and, more belatedly, the United States. Our trade with our European partners, however, has shown signs of improvement since May, and our exports to them are holding out better (down 17%) than to third countries (down 25.6%).
All categories of goods are affected by the decrease in trade, except for pharmaceutical products (exports up by 10.1% and imports by 16.6%). The aerospace and automotive sectors are especially affected by the fall in exports (down 47.2% and 38.1% respectively from the first half of 2019), while agrifood exports are withstanding relatively well (down 4.9%), particularly thanks to an increase in exports of agricultural products (up 5.1%).
The energy bill has decreased markedly (€15 billion compared to €23.6 billion in the first half of 2019), due to a significant decline in imports of energy products including gas and oil (down 41%).
According to the Banque de France, our trade in services remains slightly in surplus, with a balance of €2.4 billion compared to €11.7 billion in the first half of 2019, despite a net decline in exports (down 15.4%), more pronounced than in imports (down 9.2%). This decline is linked in particular to the trade in international-tourism-related services falling by half.
The prospects for the second half of the year and for 2021 remain uncertain and will depend on how the epidemic develops, on the outlook for a recovery in global business and also on changing trade tensions and protectionist risks. International organizations are predicting a slowdown in global trade of the order of 10% in 2020, followed by a rebound in 2021, which would nevertheless not be sufficient to restore the pre-crisis level of trade.
Under the emergency plan rolled out in March, the Government very quickly introduced exceptional measures for export companies. For example, they enjoyed enhanced support from Team France Export and export credit insurance mechanisms. They were also able to benefit from cross-cutting measures to support the economy and businesses’ cash flow (loans guaranteed by the State, partial activity, solidarity funds, postponement of or exemption from taxes and social security contributions, etc.). Specific support plans have also been put in place for some of the most export-driven sectors, particularly aerospace (€15 billion), the automotive industry (€8.5 billion) and tourism (€18 billion).
Beyond these emergency measures, which have protected our export apparatus, we now need to help our businesses, particularly SMEs, return to the international markets and stay there.
Franck Riester, Minister Delegate for Foreign Trade and Economic Attractiveness, said:
“Part of the recovery plan prepared by the Government, which will be presented at the end of August, will include support for exports and address what regions and businesses need in order to operate on international markets again. We put together this export recovery plan in coordination with the regions and all those involved in supporting [businesses] internationally, with whom we have held four meetings in the Strategic Export Council, under Jean-Yves Le Drian’s chairmanship, since the crisis began.
“Making the recovery a success will require us to rediscover the winning spirit which has made our economy strong since 2017. We’ve got to stand on our own two feet, foreign trade and France’s attractiveness. We’ve got to improve our competitiveness and strengthen our positions on the export market, but we’ve also got to rethink our relationship with the international market, and be less naive and more demanding with our trading partners. We must combine a determination in international trade with coherent action to protect the planet, and the defence of our industrial and economic sovereignty. This is the key to protecting and developing our jobs.”
These measures must allow us to return to the good foreign trade and economic attractiveness performance posted since 2017, as shown in 2019 by the improvement in our trade deficit in goods (down €5.1 billion) and increase in our exports (up €17.6 billion). At the end of March 2020, France had 130,000 exporters, the highest level for 19 years. In 2019, France was Europe’s most attractive destination in terms of foreign investment projects, overtaking the United Kingdom for the first time (EY Attractiveness Survey for France 2020). These encouraging results are the fruit of the Government’s action since 2017.
The economic and fiscal reforms begun at the start of the five-year term have allowed us, among other things, to improve our cost competitiveness, which has risen 5.6% compared to [other] OECD countries since 2017. These efforts to promote our businesses’ competitiveness will be continued and expanded under the recovery plan for our economy which will be presented in the Council of Ministers’ meeting on 25 August 2020../.