Page 60 - RusRPTApr21

5.0 External Sector & Trade 5.1 External sector overview
After many consecutive years of increase, the volume of exports declined by 5 % last year, largely on reduced exports of oil & natural gas. In addition, the almost complete drying up of revenues from foreign travellers had a significant impact. Given the uncertainties connected with Russian energy exports and tourism, the expected recovery in exports overall this year could be somewhat slow. Export growth next year should be supported by the expiration of the OPEC+ agreement on production ceilings. The growth expectations for exports in coming years are limited by projections for the energy sector, which currently see the level of petroleum product exports remaining largely unchanged and a rather moderate increase in natural gas exports.
Russia’s total imports of goods and services plunged 14 % in 2020. This was to a large extent a reflection of the almost complete collapse in Russian tourism abroad (10 % of total imports in 2019). While imports of goods also declined on weak domestic demand and the ruble’s falling exchange rate, the dip was relatively small. Russia’s total imports are expected to recover partly this year, while the timing of the resurgence in Russian tourism abroad will impact significantly the pace of recovery. The revival of imports is supported by the recent rise of oil prices that lead to higher export earnings for Russia. The pace of recovery, however, could be rather moderate as the ruble’s real exchange rate remains low (down 7 % last year from 2019). The real rate is not expected to appreciate as Russian inflation should remain reasonable and oil prices start to slide down gradually. Imports will remain significantly lower than in 2011−2014. Russia’s current account surplus, which shrank to around 2 % of GDP last year, is expected to remain solid this year and in the next few years.
Russia’s foreign trade surplus fell by 25.4% on the year to U.S. $17.6 billion in January–February, the central bank said on Wednesday. The regulator attributed the contraction to lower cost of raw hydrocarbons and to an increase in imports of goods.
External balances point to capital outflow pressures. The 2M21 preliminary data point to the CA having dropped to $13.1bn in January from $17.7bn in 2M20 due to lower volumes. Private outflows remained elevated at $12bn vs. $14.7bn in 2M20 following fewer oil-revenue conversions and FX purchases by nonresidents. With higher oil prices, we expect the CA surplus to reach 4.8% of GDP vs. 2.2% of GDP in 2020, with the rise in reserves (under the fiscal rule) accounting for 42% of 2021 CA surplus.
60 RUSSIA Country Report April 2021 www.intellinews.com