Page 120 - RusRPTAug24

issues, according to Kulikov. The optimistic scenario assumes an 18% import share if transfer problems to foreign suppliers are resolved. The conservative scenario predicts a limit of 18%, while the stress scenario allows for a reduction to 17% or less. Difficulties with international payments could reduce the import share in GDP to 17% this year. The stronger domestic currency will also reduce imports.
Experts attribute the slowdown in settlements primarily to the risk of secondary sanctions. On December 22, 2023, US President Joe Biden issued an executive order authorizing sanctions against banks involved in transactions for the Russian defence industry, affecting all dual-use goods, which have been particularly effective. Several Chinese and Turkish banks pulled out of the Russian market, causing a significant impact on trade. The Central Bank of Russia (CBR) is currently trying to find new work arounds.
In addition to China, Russia's main trading partner, other states like the UAE, Kazakhstan, and Kyrgyzstan, have also been affected. The US further complicated international payments by imposing blocking sanctions on the Moscow Exchange on June 12 that led the CBR to suspend trading in dollars.
The Ministry of Industry and Trade stated that "the approach to import substitution has been adjusted several times" and provided 2022 data showing leading industries in terms of domestic product share: woodworking (82%), transport engineering (91.8%), and ferrous metallurgy (91.7%). However, Vladimir Klimanov, Director of the Center for Regional Policy at RANEPA, noted that "the current pace of import substitution is insufficient to achieve national goals."
A Bank of Russia macroeconomic survey in July reflected analysts' caution, lowering the import forecast by $5bn to $378bn in 2024. The Ministry of Economic Development, which considers only goods, expects imports to total $324bn by year-end, stating that "the government is implementing a set of measures aimed at import substitution and expanding supply on the domestic market."
● Partners & regions
Turkey is significantly reducing trade with Russia due to the threat of sanctions, and China is going to limit the export of UAVs. Due to the threat of secondary American sanctions, the export of goods from Turkey to the Russian Federation fell to $4.16bn in the first half of the year, which is 28.3% less than in the same period last year. At the same time, Turkey reduced imports from the Russian Federation by 10.3%, $22.04bn. As well, China will ban the export of all civilian UAVs that can be used for military purposes from September 1, and some functions of exported drones will be limited.
120 RUSSIA Country Report August 2024 www.intellinews.com