Russia’s foreign trade has lived through a dramatic alteration in 2020, yet the new environment is likely to be temporal, since even the pandemic is unable to instantaneously change the decades-old global supply-chains. Russian-exports are very much different now as far as its geography, commodity structure and volumes are concerned. Balance of foreign trade as of the end of the first six months of the year is still positive. According to the Central Bank, aggregate exports reached $158 bln, whereas imports were $110 bln. These figures are about 1.5 times lower year-on-year.
Traditionally exported hydrocarbon resources have now been replaced by other commodities resulting in a drastic hard currency revenue drop. A sharp decline in both the prices and volumes of exports of oil, oil products, natural gas, and coal caused a serious weakening of the national currency, and therefore a need to generate hard currency inflow by alternative means. Russia has started selling gold in international markets and stopped increasing its gold reserves. According to the Russian customs, over the first seven months of 2020 the revenue from the export of crude oil were only 63% year-on-year; of refined products, 72% year-on-year; of natural gas, 49% year-on-year; of coal, 72% year-on-year; of coke, 56% year-on-year, while volume of car fuel export has somewhat grown. As for non-energy resources, increase in exports of iron and steel (+7% year-on-year), copper, plastics, and pharmaceuticals has been recorded.
In 2020, exports of agricultural produce have been growing. Pork export is up 2.7-fold, poultry 1.6-fold, with milk, dairy products, wheat, fish, vegetable oil, and sugar exports up multifold. That is to a great extent due to cultivation of new lands and climate change in Russia.
Still, hydrocarbons make most of Russia’s exports (53% over the first nine months of the year against 64% a year earlier). Yet all the export goods have little added value, while added value is a key to successfully relaunching economy and becoming integrated into global value chains. Exports of high value goods such as cars, trucks and machinery were very much down.
Of all Russian exports 14% go to the CIS nations, and the rest to other countries, major foreign trade partners being China, Germany, the Netherlands, the US, the UK, and Turkey.
Towards the end of 2020 weather conditions may influence exports of energy resources, and a cold winter will result in higher sales of oil and gas. The rise in exports of agricultural produce gives a hope the foreign trade balance will show no fatal drop and export revenue will support national currency which in autumn lost a great deal of its value.
By Valeria Minchinova, Associate Professor, Financial University under the Government of the Russian Federation