Economic trends
Since 2005, the annual growth rate of the French economy has stayed with difficulty at around 2%, practically at the same level as inflation. However, this rate decreased in 2008 to 0.7% because of the financial crisis which affected the country and it is expected that there will be practically no growth in 2010.
France is especially dynamic in the area of foreign trade and more specifically in exporting services. Nevertheless, foreign trade is having more and more difficulty in supporting GDP growth. Likewise, the loss, by households, of confidence has had a negative impact on consumer spending.
Since its election in 2007, the Sarkozy government has undertaken various structural reforms to reduce the budget deficit and keep the level of the public debt in check. At the same time, measures have been taken to promote re-employment, investment and exports. Unemployment, which was at 7.3% in the third quater of 2008, has reached more than 9% in 2009.
The global financial crisis has shown that France had a healthy and secure financial system. In effect, French banks operate within a healthy environment which avoided chain-reaction failure, as seen in the United States.
Main branches of industry
France is the biggest agricultural power in the European Union accounting for a quarter of its total agricultural production, and the second agricultural power in the world after the United States. Nevertheless, the sector only represents a very small part of the country's GDP. The French agricultural sector receives significant subsidies, especially from the European Union. Wheat, corn, meat and wine are France's main agricultural products.
France's manufacturing industry is varied, however, the country is in the middle of undergoing a de-industrialization process which translates into numerous relocations. The key industrial sectors in France are telecommunications, electronics, cars, aerospace and weapons.
The tertiary sector represents about three-fourths of the French GDP. France is the leading-tourist destination in the world with more than 75 million foreign tourists every year.
International trade
France is one of the 10 leading exporters in the world. Exports are especially sustained by the aeronautical and automobile industries, yet the country registers a strong trade deficit. Imports are developing quickly, as the French population buys a lot of imported goods which are sold relatively cheaply on the local market in comparison to products "Made in France".
Despite the government's efforts to favor innovation (with the development of competitive clusters and the establishment of tax credits for Research and Development), French exports have relatively low added value. There are only a few French SMEs on markets which have a strong potential for development (such as China or Eastern European countries), and these continue to suffer from being compared to German companies, whose export potential is widely exploited. This group of factors, combined with the sharp increase in oil prices in the past years, explains France's large trade deficit, which should worsen in the course of the coming years. In 2009 the deficit widened to over 47 billion euros, reflecting a sharp rise in imports, including energy supplies and industrial purchases.
France's main trade partners are the European Union, the United States and China.
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