Russia's Exports Revenue Is Beginning to Grow Along with Global Oil Prices

11 january 2017

The growth in global trade has slowed down significantly in recent years, with one of the reasons being the falling trade of a number of leading exporters, such as China. Against this backdrop, Russia dealt a serious blow due to the global oil prices significant decrease. As far as energy traditionally makes up the bulk of Russia's exports, the export revenue shrank precariously despite the sustainable growth of its physical volume. At the same time, Russian industrial exports saw few gains despite the drastic depreciation of the ruble, taking into consideration that Russian industrial goods can hardly compete in the global markets. Those are the observations Analytical Center experts make in their bulletin on the current trends in the Russian economy titled “Foreign Trade: a Road to Recovery.”

After the 2008-2009 global recession, international trade began to grow slower than the global GDP, the analysts note. The latest estimates by the IMF suggest that in 2016 the PPP GDP would grow by 3.1% while international trade would increase by just 2.3%. Key nations around the world are seeing their imports and exports recover after the 2014-2015 slump, but the growth rates remain low. The increase in international trade is an important factor contributing to the recovery of the Russian economy after the slump it experienced because of low global prices for oil and other energy resources, as well as the devaluation of the ruble and the continued policy of mutual sanctions pursued by Russia and the West.

According to the data of the Russian Federal Customs Service adjusted for seasonal variation, Russia's dollar-denominated exports began to fall sharply in mid-2014, with the result that in April 2016 the country's total exports in dollars amounted to just 60% of the average monthly exports seen in 2010. August 2016 saw Russia's imports return to growth on an annualized basis, which, for the most part, was a result of a very low base in 2015, in the middle of which imports were falling by as much as 40% month on month. In January through October 2016 Russia imported $148.3 billion worth of goods in the current prices, which is 2.6% less than in the first 10 months of 2015 and 39% less than in the first 10 months of 2014. Products being imported from outside the former USSR comprise primarily high tech items such as machines, equipment and vehicles, which made up 49.5% of the country's dollar-denominated imports in the first 11 months of 2016 (in 2013-2015 their share was 48%). China remains the leading supplier of goods to Russia (21% of all goods imported in the first 10 months of 2016 came from China), even though 2015 saw Russia's trade with China decline by 28.6%, totaling $68.1 billion that year.

Foreign trade in goods and services (and according to the Bank of Russia, goods make up 85% of Russia's exports and 70% of the imports while services make up 15% o the exports and 30% of the imports) as a GDP component moderates both positive and negative fluctuations in it. In the first six months of 2016 the GDP decline in Russia slowed down significantly, with it falling by just 0.9% on an annualized basis, but without foreign trade taken into account (because imports continued to contract), the Russian GDP would have shrunk by 1.6%.

The experts note that Russia's export revenue is beginning to increase as the global oil prices are going up. If the OPEC and the oil exporting nations that joined the agreement to reduce oil production perform their obligations under that agreement, the global oil prices can be expected to stabilize and increase further, the specialists believe.

For more see the bulletin Foreign Trade: a Road to Recovery.

You can find other bulletins on the current trends in the Russian economy in the Publications section.

other bulletins on the current trends in the Russian economy in the Publications section.