Page 94 - RusRPTJun24

January-February.
Imports were still close to pre-invasion levels at the beginning of 2023, but the drop in the value of goods and services imports that began last year extended into the first quarter of this year. The value of imports in 1Q24 was roughly the 2019 average. The CBR notes that the contraction in imports reflects multiple factors, including weakening of the ruble, a build-up of inventories and difficulties in settling international payments. In addition, imports appear to have been slowed by tighter enforcement of Western export restrictions. The biggest factor in reducing services imports has been the decline in foreign travel. Nearly half of Russian tourists travelling abroad last year went to Turkey. The CBR estimates that the rapid depreciation of the ruble and Turkey’s galloping inflation dampened demand for travel to Turkey. Asian countries continued to increase their dominance as suppliers of goods to Russia. Russian Customs figures show that Asian supplies accounted for 68 % of Russian goods imports in January-February.
The threat of secondary sanctions from the US has made it difficult for Russia to bypass sanctions and led to a partial collapse of Russian trade. Companies have lost up to 7% of their turnover amount. As the FT writes, due to the threat of secondary sanctions for banks cooperating with the Russian Federation, total exports from Turkey to the Russian Federation fell by 33% to $2.1B in the first quarter. Exports of dual-purpose goods to the Russian Federation and its bordering countries fell by 40%, up to $93M. Even for large companies, such as Nornickel, total losses reach 5-7% of the turnover.
The growth rate of world trade will double this year: Who will benefit from this?International organizations predict that global trade growth should double this year as inflation eases and the booming US economy boosts activity. As the FT noted, the OECD, IMF, and World Trade Organization predict a sharp recovery in global goods flows this year after slowing in 2023. According to the OECD, global trade of goods and services will grow 2.3% this year and 3.3% in 2025, up from 1% growth last year. Meanwhile, increased trade has helped boost growth in some of the EU's biggest economies in the first quarter. Overall growth in the eurozone rose 0.3% from the previous three-month period, the highest since the third quarter of 2022. For example, German exports in March increased by 0.9% compared to February, which contributed to growth of 3.2% every quarter. Imports to Europe's largest economy also rose by 0.3% in March and 1.7% in the first quarter.
94 RUSSIA Country Report June 2024 www.intellinews.com