Page 57 - bneIntelliNews monthly country report Russia May 2024

vacated niches in the domestic market, "reclaiming" about 3.5 trillion rubles from foreign companies.
The Center for Macroeconomic Analysis and Short-term Forecasting emphasises that the historical decrease in the share of exports was also influenced by the factor of domestic demand recovery due to increased government investments, including expenditures on defence, industry, the construction sector, and major infrastructure projects. Thanks to this, in 2023, Russia demonstrated one of the highest economic growth rates (+3.6% year-on-year) among the G20 countries.
Russian exports fell to $97.9 in the first quarter from $105.1bn the previous year on lower production at its oil refineries that have been targeted by Ukraine’s drones, the Central Bank of Russia (CBR) said on April 18.
Specific figures for oil exports not disclosed. The CBR attributed the decline to a combination of factors including external trade restrictions and a drop in global commodity prices, such as gas, coal, and various metals.
"The value of exports continued declining in conditions of external trade restrictions and lower global prices," the bank stated in Reuters reports. It also noted that "lower production at oil refineries also put downward pressure on exports." Since the start of the drone war earlier this year Ukraine has been targeting Russian fuel production and is now expanding the campaign to hit factories and military production facilities.
Despite these challenges, the bank noted some positive aspects mitigating the decline: "The year-on-year decline in the value of exports had slowed due to high oil prices, while the good grain harvest was also supporting exports." Russia’s economy is under pressure from Western sanctions but has benefited from higher oil prices recently that has led to a record high current account surplus of $13.4bn in March. Industrial production has also benefited from heavy state spending on the military industrial sector and real wages have benefited from the military Keynesianism boost and tight labour market that has driven both nominal and real wages up.
Nevertheless, in its latest macroeconomic survey for April, the CBR said that the economy has stabilised but growth will slow from 3.6% reported in 2023 to 2.2% this year as problems like high inflation and interest rates take their toll on growth.
On the imports front, Russia saw a significant reduction, with goods imports dropping by 10% y/y to $66.8bn. The central bank said this decrease was due to high interest rates, a weaker ruble, and issues with payment systems which are "also restrained by problems with payments." The outlook for the rest of the year is uncertain with much depending on the efficacy of secondary sanctions loom that Office of Foreign Assets Control (OFAC) has been
57 RUSSIA Country Report May 2024 www.intellinews.com