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France - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Paris
Area:: 549 km2
Total Population:: 65.697
Annual growth rate:: 0.00%
Density:: 120.00/km2
Urban population:: 86%
Population of Paris (11.769), Lyon (1.665), Marseille (1.605), Lille (1.143), Bordeaux (1.010), Nice (943), Toulouse (851), Nantes (804), Strasbourg (639), Montpellier (252), Rennes (206)
Official language: French
Other languages spoken: The regional languages (Breton, Corsican, Catalan, etc.) are only spoken locally and by a minority of French people.
Business language: According to the type of company contacted, its geographical location and sector of activity, it may be difficult to find someone who speaks English.
Ethnic Origins:: A mix of Celtic and Latin peoples with North African, African and Asian minorities.
Beliefs: Catholics 62%, Protestants 1%, Jews 1%, Muslims 6%, No religion 26%.
Telephone codes:
To make a call from: 0
To make a call to: +33
Internet suffix:: .fr
Type of State::
Republic, parliamentary democracy combined with presidential power.
Type of economy::
High-income economy, OECD member, G8 member
The world's leading tourist destination; one of the top ten export powers of the world; a relatively high unemployment rate

Economic overview

The international financial crisis led France into a recession in 2009, the French economy contracted by 2.5%. Nonetheless, the country resisted this episode better than the average of the Euro-zone countries, thanks to a more diversified economy, a more solid banking system, as well as a massive stimulus plan. The GDP improved in 2010-2011, mostly driven by the resumption of international trade. However the Euro-zone sovereign debt crisis put an end to this brief upturn and growth dropped to zero in 2012.  Due to a rise in unemployment and a lack of entrepreneurial confidence, growth was only 0.2% in 2013. The growth rate for 2014 is estimated to reach 1%, based on the improvement of the regional context.

In 2013, the vagueness of political decisions was criticized, foreign investors were not confident. With a public debt approaching 90% of GDP and a high bank exposure to the struggling Euro-zone countries, France remains particularly vulnerable. In early 2012, the rating agency Standard and Poor's downgraded the country's sovereign debt. The government's priority is given to restoring public finances through a policy of fiscal restraint. However, during the summer of 2013, the government created again several new taxes. Among the key measures, the government had planned an exceptional solidarity contribution of 75% on the income bracket exceeding one million euros, which was rejected, and the creation of an income bracket taxed at 45%. In 2013, the CICE (Pact for Growth, Competitiveness and Employment) plan was announced with the purpose of improving the competitiveness of French companies. For 2014, the government has announced its plan to reduce public expenditure, expecting to save EUR 15 billion. Lastly, France must bring down its public deficit to 3.6% of GDP by the end of 2014, as stipulated by the regulations of the European Union. The retirement plan reform was considered too reticent by the labor management. France must also deal with a loss of competitiveness on its economy and its process of de-industrialization. Lastly, the influx of FDI into the country clearly decreased in 2013.

The rate of unemployment has been affected by the crisis, estimated at 11% in 2013, it has reached its highest level in 12 years but it should become stable in 2014. The municipal elections in March 2014 and the European elections in May 2014 could slowdown the rhythm of the reforms.

Main industries

France is the largest agricultural power in the European Union, accounting for one-fourth of its total agricultural production, and the second agricultural power in the world after the United States. Nevertheless, the agricultural sector only represents a very small part of the country's GDP. The French agricultural activities receive significant subsidies, especially from the European Union. Wheat, corn, meats and wine are France's main agricultural products.

France's manufacturing industry is varied; however, the country is currently undergoing a de-industrialization process which translates into numerous relocations. The key industrial sectors in France are telecommunications, electronics, automobile, aerospace and weapons.

The tertiary sector represents nearly 80% of the French GDP and employs almost 75% of the active workforce. France is the leading-tourist destination in the world with more than 75 million foreign visitors every year.

Foreign trade overview

France is one of the 10 leading exporters in the world and trade represents more than 50% of the country's GDP.

However, the country registers a strong structural trade deficit. Imports are developing quickly, as the French population buys a lot of imported goods which are sold at less expensive prices on the local markets in comparison to products "Made in France". Energy imports and their net increase in prices also affect the balance of the accounts. In addition to this, despite the government's efforts to favor innovation, French exports have a relatively low added value. France's trade experienced a slowdown in 2013; exports decreased mainly in the automobile sector. In return, the agricultural exports, mainly cereals, increased while the energy imports decreased. Subsequently, the trade deficit was 9% lower than the results of 2012.

France's main trade partners are the European Union, the United States and China.

FDI

According to the World Investment Report for 2013 published by the UNCTAD, France is the 16th largest recipient of FDI in the world, it went down five places in relation to 2012. Paris is the world's second largest city, after Tokyo, in terms of location of the headquarters of multinationals; currently, the city hosts nearly 500 of them. The country recorded a decline in foreign investment due to the deteriorating international economic situation in 2009/2010, but since then, the flows have been slowly recovering. However, according to the records provided by the UNCTAD, FDI were reduced by 77% in 2013 while they were increasing in other developed countries. France went down three places in the classification Doing Business 2014 issued by the World Bank (it ranks 38 out of 189 countries).

The country's strengths include: its position as the fifth world's largest power, its highly-skilled workforce, its large industrial base, its agricultural resources and its geographic location in the center of Europe.

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