Page 38 - RusRPTApr19

5.0 External Sector & Trade 5.1 External sector overview
Russian customs reports that in 2018 the country’s goods trade surplus climbed to $212bn, or roughly 12% of GDP. Russia is now running a triple surplus again for the first time in years: trade, current account and federal budget. Both the budget and the current account surpluses are at record levels. The record trade surplus was driven partly by the rise in oil prices in 2018, but falling imports, especially falling food imports, played at least as important a role.
Exports remain heavily weighted towards hydrocarbons, which totalled $260bn in December – more than half of Russia’s exports, with minerals and base metals making up another $48.7bn from the total of $461bn.
Imports are half as much as Russia’s exports, which has led to the record current account surplus in 2018. Imports are more evenly distributed but the top four items – machinery ($80.7bn), chemicals ($32.4bn), vehicles ($28.4bn), and base metals ($18.5bn) – accounting for 70% of the total imports to Russia.
One of the main drivers of the growing trade balance has not been growing exports or rising oil prices, although that has contributed to the record, but as important, or more so, has been falling imports, which were flat or decreasing in 2018, especially in the second half of last year. This is partly due to the falling real incomes in 2018, down for the fifth year in a row.
The second factor driving down imports is Russia’s increasing self-reliance in food production. Russia’s imports of meat and meat products plummeted by almost 58% to 800,000 tonnes over the past four years since introduction of sanctions and counter-sanctions, Sergei Dankvert, director of the Federal Service for Veterinary and Phytosanitary Oversight, said in an interview with Rossiya 1 channel in February.
“We have interesting figures to share. Let’s take the year of 2014. We imported almost 1.9 million tonnes of all types of meat and meat products then. Now let’s have a look at the past year, and we see only 800,000 tonnes. We’ve replaced almost 1 million tonnes over the four years,” he said. “If we look at milk and dairy products, we had 1.164 million tonnes (imported in 2014), and now we have only 790,000 tonnes,” he said. He added that imports from Belarus amount to about 350,000 tonnes, and imports of dairy products and milk from all other countries amounts to about 450,000 tonnes. The reduction of imports happened simultaneously with an increase in domestic production, he added.
Country-wise, China has become the single most important partner, accounting for 12.4% ($60.6bn) of Russia’s exports in December and 22% ($56.9bn) of its imports. European countries feature heavily as Russian export markets, but the US accounts for only 2.8% ($13.5bn) of Russia’s exports, although it is the third most important source of imports, accounting for 5.3%
38 RUSSIA Country Report April 2019 www.intellinews.com