Foreign Trade in France and Germany: Casualties of the Recession

Country after country has been reporting declines in its foreign trade. Imports are down as a result of falling incomes at home, and exports are down as a result of falling incomes abroad. Today France reported a 6.7% decline in exports in January from December while Germany reported a 4.4% decline. From January 2008 to January 2009, French exports declined 21% while those in Germany declined 18.4%. Imports in France were down17.6% in January from a year ago and imports in Germany were down 11.1% over the same period. Exports from France and Germany are shown in the first chart and imports into France and Germany are shown in the second chart.

Germany typically runs a substantial trade surplus. It reached a peak of 19.34 billion euros in November 2007. With exports declining at a faster rate than imports, the balance on trade in goods has trended downward and in January, 2009 was only 8.3 billion euros. France, on the other hand has been running a growing trade deficit since early 2004. The deficit improved in December to minus 2.95 billion euro from minus 5.67 billion in November but has worsened again in January and is now at minus 4.55 billion euros. The balances on trade in goods for France and Germany are shown in the third chart.

Automobiles and related products have been responsible for a good part of the decline in exports in France and Germany. The fourth chart shows exports of these products. The data only go through December, but even by then the exports of these products were down 31.6% in Germany from a year ago and 44.4% in France. The fourth chart shows these exports for France and Germany.