The structure of Russia’s foreign trade has been changing rapidly with new geopolitical trends that began emerging in 2022. In 2023, the country further intensified the expansion of cooperation with its priority partners, a policy that is supported at the highest state level. A recent and very illustrative example was Vladimir Putin’s remarks at the opening of the Russia-Latin America International Parliamentary Conference, which was held in Moscow from September 29 to October 2. Trade between Russia and Latin America has increased by 25% over the last five years, the President said. These figures are rather indicative. But perhaps it is particularly important to note the high trade development potential with this region of the world – potential for a more dynamic development than in the previous years, in the nearest future.
If we look at the chronological dynamic of relations, the actual growth in Russia’s trade with Latin America has been noted only since 2021 while the period between 2018 and 2020 saw a certain decline. The trade in 2021 reached $21.5 billion, slowing down by 6% in 2022 ($19.9 billion). But even this drop shows a positive trend as Russia increased grain exports to Latin America and the Caribbean countries by almost 50% in 2022 and there is a serious potential for further growth in this sector.
Another interesting aspect is that even the figures achieved in 2022 and their expected increase this year look relatively modest compared to the trade between Latin America and the United States (approximately $800 billion). In my opinion, there is a possibility to pull part of this “blanket” to Russia’s side, especially in those product niches where we are traditionally strong. The basis may include wheat, fertilizers and oil products, trade to be further driven by nuclear energy, IT exchanges and joint development, etc.
Moreover, the changing world order of today that is provoking a dramatic shift in international cooperation patterns opens up opportunities for Latin American businesses to take over the now vacant niches in Russia.
At the same time, considering the high degree of sophistication of Russian technologies and equipment in the processing industry, associated Russian businesses will take advantage of new windows of opportunities in Latin America in terms of investment and further successful cooperation in natural resources management. As a connector, the development of quarry excavator exports (and other related heavy machinery) seems logical. And it is only part of the synergetic potential.
Concerning developing relations, as I noted earlier, we need targeted support at the government level of involved countries in order to optimize taxation, logistics and other costs that may remain a withholding factor.
The specifics and structure of international cooperation are radically changing today, and these changes should be considered exclusively as stimuli for developing and updating the structure of partnerships.
By Oleg Cherednichenko, Ph.D. (Economics), Associated Professor of the Department of Economics at the Plekhanov Russian University of Economics