January 10, 2008	Thursday	Zilhaj 30, 1428

PARIS, Jan 9: France is on track to post a record trade deficit in 2007, following a huge surge in the shortfall in November that threatens to weigh heavily on prospects for the French economy.

News of a sharp 32pc widening in the deficit in November compared with the October figure came as Germany, a key French trading partner and the eurozone’s largest economy, reported a gain in its trade surplus to the highest point since reunification in 1990.

The data led analysts and officials to warn that France was suffering from an underlying fall in competitiveness, a point frequently made by commentators as the trade and balance of payments figures have worsened over the last two years.

The French customs authority said the November trade deficit came to 4.792 billion euros ($1.7bn) from 3.626 billion in October.

It said that in figures corrected for seasonal variations exports fell to 33.304 billion euros while the value of imports rose to 38.096 billion.

“We are heading for a record deficit this year (2007),” warned economist Nicolas Bouzou of the research group Asteres, predicting an annual reading of 41 billion euros after a record 28.192 billion in 2006.

At Xerfi, a market research unit, analyst Alexander Law said “the French economic situation is now critical.” He described the November trade figures as “an alarming signal.”

He said the economy was now likely to have expanded a “microscopic” 0.1 per cent in the fourth quarter of 2007, putting annual growth at 1.8 per cent a far cry from the government target of 2.0-2.5pc.

“What is worse is that the first three months of 2008 are not likely to be any better. Our forecast of growth of 1.4pc for this year appears almost optimistic.”

Bouzou of Asteres argued that the dismal November performance could not be blamed on high energy prices alone, as imports of industrial goods also rose, nor on the subprime housing market crisis in the United States.

The appreciation in the euro cannot furthermore be singled out as a “scapegoat,” he maintained, as exports to the European Union were stagnant while the value of imports increased.

“The November figures reflect a loss of competitiveness that is intrinsic to French industry.”

The surplus was estimated at 19.3 billion euros ($28.4bn), up from 18.9 billion in October.

—AFP