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FOREIGN TRADE
Structural reforms have gone hand in hand with
the opening up of the French economy to foreign trade.
The main exports of France are machinery and transport equipment, agricultural products, including wine. Manufacturing accounts for ¾ of total exports of goods and services, and exports represent 27 % of French GDP.
France is the world's second largest exporter of services and farm products and fourth largest exporter of goods (principally durables).
France's main customers are Germany, Italy, the United Kingdom, Belgium and Spain, along with the United States. In 2004, French exports (Euro 341 Billion) increased by 5.6 %, the imports (Euro 349 Billion) increased by 8.6 %, which reveals a negative balance of Euro 7.8 Billion. However, France feels that the trade deficit should not mask the dynamism of its exports that reached into 2004 their higher historical level.
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CHALLENGES FACING FRANCE
After a period of relative success at the end of the 1990s, there has been a recent slowdown in GDP growth. GDP per capita has not grown strongly enough to narrow the income gap vis-à-vis the United States.
In addition, France, like other western countries, faces the challenge of an ageing population. Although the reforms necessary to meet this challenge have begun to be implemented, further adjustments are needed to sustain the progress of the French economy and help strengthen its growth potential. This will require the government to set a clearer course with a more logical strategic direction, coordinating its approaches to product and labour markets and the system of governance.
Another challenge is to create more jobs. In spite of improved employment rates,
unemployment remains high. Compared with other OECD countries, the minimum labour cost in France is high relative to the average cost. This has a negative impact on demand for labour, especially for certain groups such as young and low-skilled workers.
One important priority for the French economy is to reduce hurdles to entry in network industries that contribute to higher prices and limit choice. Introducing competition in rail transport and secure non-discriminatory third-party access in telecommunications and air transport can do this.
Further, the need to manage pollution, natural resources and biodiversity in France continues to be a major challenge. France has followed an effective environment policy and progress has been made regarding legislation and management in the field of natural and technological risks. Also, efficient water management through a basin-level approach has achieved significant results.
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