Report

France's balance of payments and international investment position 2022

20 July 2023

As part of its core duties, and in accordance with Article 141-6 of the French Monetary and Financial Code (Code monétaire et financier), the Banque de France is responsible for establishing France’s balance of payments and international investment position. The report provides a comprehensive overview of France’s economic, financial and monetary situation with regard to the rest of the world. It examines information provided to the Banque de France by financial intermediaries, businesses and public administrations in order to draw up the French balance of payments and international investment position in accordance with the methodology recommended by the International Monetary Fund and agreed with its member countries. An analysis of France’s balance of payments – current account (goods, services, primary and secondary income), capital account, financial account (direct investment, portfolio investment, other investment, including bank loans and deposits, financial derivatives and reserve assets) – is followed by a presentation of its international investment position.

In 2022, the current account balance deteriorated sharply, showing a historic deficit of EUR 53.9 billion (2% of GDP), after a slight surplus in the previous year. Following the post Covid rebound in 2021, the global economy experienced international tensions linked to the war in Ukraine, the effects of which were directly reflected in the balance of payments. The balance of trade in goods bore the brunt of the decline in current account transactions, directly linked to the sharp rise in energy prices that began in 2021. Conversely, the surplus in trade in services reached a historic high, but the increase, at a rate comparable to that seen in 2021, was too small to offset the widening of the deficit in trade in goods. The income surplus fell in 2022, but remained at a high level. 

The financial account recorded net capital inflows of EUR 57.7 billion. 

The current account was mainly financed by portfolio investment inflows, which amounted to EUR 119.3 billion, whereas loans and deposits from French and foreign banks generated net capital outflows. Despite the increased borrowing requirements, France’s net international investment position improved by EUR 143.4 billion, with the deficit narrowing to EUR 629.3 billion, or 23.8% of GDP, compared with 30.9% in 2021. The increase in net liabilities due to debt securities purchased by non residents was more than offset by strongly negative valuation effects on liabilities, attributable to the fall in the market value of French debt securities  following the sharp rise in interest rates.

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