Energy bill, euro fall, hit French trade balance

(PARIS) - The French trade balance showed a reduced deficit in June but an increased gap for the first six months of the year, data from the economy ministry showed on Friday.

In June the deficit fell to 3.796 billion euros (5.0 billion dollars) from 5.179 billion euros in May.

The fall came after exports picked up to total 33.0 billion euros in the month from 30.0 billion euros in May, helped mainly by sales of equipment for transportation, notably airliners.

But for the first six months, the deficit increased to 24.5 billion euros from 20.4 billion euros for the same period of last year.

The trade balance is an important indicator of the competitiveness of an economy and the ability of a country to pay its way in the world in trade in goods and services. The trade data form part of an even more critical measure of long-term fundamental forces in the economy, the balance of payments.

France has been running a structural trade deficit for some time, and analysts say that this reflects a number of underlying weaknesses in the economy.

The deficit over six months increased mainly because of an increase in the energy import bill, as denominated in the euro which has fallen against the dollar.

The ministry noted that exports had risen by 10.0 percent in the first half on a 12-month comparison and that for the second quarter they had risen by 6.0 percent.

Junior Trade Minister Anne-Marie Idrac said that this "shows the capacity of French exports to bounce back as the economy emerges from the crisis."

She welcomed a particularly big increase in trade with emerging economies.

Separate data from the budget ministry showed that the central state budget showed a sharply reduced deficit of 61.7 billion euros at the end of June from 82.4 billion euros in the first six months of last year.

This reflected the ending of exceptional measures to stimulate the economy through the downturn and a rise of tax revenues, it said.

The central government budget is one of three components forming the public deficit, which is the figure used by the European Union to measure excessive deficits.

EU countries, and notably countries in the eurozone, are bound to contain any public deficit to less than 3.0 percent of output. Several countries, including France, have far higher ratios, notably because of the costs of facing the global economic downturn.

France, in common with several other countries, is now working on reforms to reduce its structural deficit.