With a GDP of $2.7 trillion, France is the world’s fifth-largest economy. It has substantial agricultural resources, a large industrial base, and a highly skilled work force. A dynamic services sector accounts for an increasingly large share of economic activity and is responsible for nearly all job creation in recent years. Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate has been a top priority.
Real GDP increased by 1.5% in 2010 after falling 2.7% in 2009 due to the economic crisis. The government expects GDP growth of 1.0% for 2011 and 1.0% for 2012. The Organization for Economic Cooperation and Development (OECD) downgraded its forecast for French GDP growth to 0.3% in 2012. The International Monetary Fund (IMF) is likely to revise its forecast for French GDP growth of 1.4% in 2012. The unemployment rate in metropolitan France increased to 9.3% in the third quarter of 2011, up from 9.2% in the fourth quarter of 2010.
France joined 10 other European Union countries in adopting the euro as its currency in January 1999. Since then, monetary policy has been set by the European Central Bank in Frankfurt. On January 1, 2002, France, along with the other countries of the euro zone, dropped its national currency in favor of euro bills and coins.
France has been very successful in developing dynamic telecommunications, aerospace, and weapons sectors. According to a Google-commissioned McKinsey study, 25% of French growth is attributable to Internet-related products and services. Despite significant reform and privatization over the past 15 years, the government continues to control a large share of economic activity. Government spending, at 56.2% of GDP in 2010, is among the highest in the G-7. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications.
The French government has said that reducing budget deficits would help ensure sustainable growth, with structural reforms helping offset the recessionary effect of budget cuts. Structural reforms include pension reform, investment in infrastructure and education, and improved financial sector regulation, including global reforms that France planned to pursue through its presidency of the G-20. The government aims to continue budget cuts through the attrition of civil servants. Budget spending is set to increase 0.5% per year (excluding inflation) between 2012 and 2015, compared to 0.8% per year between 2011 and 2014. The government's target for the budget deficit is 5.5% of GDP for 2011 and 4.6% of GDP for 2012.
In 2008, in a move to make France more competitive, the National Assembly passed four bills introduced by the French Government to modernize the economy and reform the labor market. In October 2007, under President Sarkozy's impetus, overtime work beyond the 35-hour work week was exempted from income and payroll taxes, a move aimed at improving worker productivity. President Sarkozy is also credited with eliminating the annual flat business tax and increasing the tax credit for investments in small and medium enterprises that increase a firm's equity capital. In July 2009, the French Parliament approved a controversial bill allowing more businesses to stay open on Sundays.
Membership in France's labor unions accounts for approximately 5% of the private sector work force and is concentrated in the manufacturing, transportation, and heavy industry sectors. Most unions are affiliated with one of the competing national federations, the largest and most powerful of which are the communist-dominated General Labor Confederation (CGT), the Workers’ Force (FO), and the French Democratic Confederation of Labor (CFDT).
With virtually no domestic oil production, France has relied heavily on the development of nuclear power, which now accounts for about 80% of the country's electricity production. Since the March 2011 earthquake, tsunami, and nuclear disaster in Japan, the Government of France has been reviewing France’s dependence on nuclear energy, and whether or not new safety standards should be developed. French anti-nuclear environmental groups stepped up efforts to spark public opposition to nuclear power in France, and Socialist presidential candidate Francois Hollande has suggested reducing France’s dependence on nuclear power by 50% by 2025. Henri Proglio, chief executive of the government-controlled utility provider Electricite de France, estimated in a November 2011 interview that a switch to fossil fuel-derived energy would require an investment of $544 billion and endanger up to 400,000 jobs.
France is the second-largest trading nation in Western Europe (after Germany). France ran a $70 billion trade deficit in goods (Customs basis, f.o.b.) in the first 11 months of 2011. Total trade in goods for the first 11 months of 2011 amounted to $1.183 trillion, over 42% of GDP, 59% of which was with the other EU-27 countries. In 2010, U.S.-France trade in goods and services totaled $97 billion. U.S. industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, and broadcasting equipment are particularly attractive to French importers. Principal French exports to the United States are aircraft and engines, beverages, electrical equipment, chemicals, cosmetics, and luxury products. France is the eighth-largest trading partner of the United States.
France is the European Union's leading agricultural exporter, accounting for about 17% of all agricultural land within the EU-27. The share of agriculture value-added in GDP has shown a steady decline since the early 1980s, representing less than 1.7% of France's GDP in 2010. Agricultural production not including subsidies fell 8.5% from the preceding year to €60.6 billion ($80 billion) in 2009. Northern France is characterized by large grain farms. Dairy, pork, poultry, and apple production is concentrated in the western region. Beef production is located in central France, while the production of corn, fruits, vegetables, and wine ranges from central to southern France. France is expanding its forestry and fishery industries. France remains extremely cautious about the cultivation of genetically modified (GM) plants at the domestic and EU levels. France is a proponent of the European preference principle and is attentive to protecting its interests in further agricultural trade liberalization at the EU and World Trade Organization (WTO) levels.
France is the world's second-largest agricultural producer after the United States. The destination of 66% of its 2011 exports was other EU member states, according to French Customs. According to the U.S. Department of Agriculture, U.S. exports of agricultural, fish, and forest products to France totaled $763.15 million in 2010. During the first 10 months of 2011 they totaled $615.5 million, up 5% compared to the same period in 2010. The top 10 products exported by the U.S. to France include tree nuts ($78.6 million), soybeans ($55.8 million), planting seeds ($31.4 million), vegetable oils ($25 million), wine and beer ($24.8 million), forest products ($24.6 million), hides and skins ($20.7 million), grapefruit ($19.6 million), surimi ($19 million), and salmon ($15.3 million.) The United States, the sixth-largest exporter to France in recent data, faces stiff competition from domestic production, other EU member states, and third countries. U.S. imports of agricultural, fish, and forest products from France totaled $1.99 billion in 2010. During the first 10 months of 2011 they were at $2 billion, up 24% compared to the same period in 2010. Half of it consisted of wine and beer.
Sources:CIA World Factbook (February 2012)
U.S. Dept. of State Country Background Notes ( February 2012)