Page 68 - bneMag Dec22
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68 I Eastern Europe bne December 2022
Russian imports crashed in first months following the invasion of Ukraine, but now have clawed back much of those losses and are expected to end this year only 10% down on 2021 levels and 5% down in 2024.
Russia’s imports recover as
trade pivots to the east
The Russian economy had recovered around three quarters of its April import lows by September, according to BCS GM’s estimates, with the main growth coming from imports from China and the Eurasia Economic Union (EAEU) members.
Trade with China was also briefly halted in the spring, but rapidly bounced back, with China now having overtaken Europe to become the country’s biggest partner. Russia’s bilateral trade with China in 2021 reached $141bn – the same value as the volume with Europe now – of which Russian exports to China amounted to $68bn.
The volume of trade has already surpassed the full-year result of last year to reach $153.9bn in the first ten months of this year, according to the Chinese Customs Ministry, of which Russian exports to China reached $94.34bn. Extrapolating to the end of the year,
that indicates the full-year trade volume result will be of the order of $184.6bn – an all-time high and on course to achieve the two countries' mutual goal of hitting $200bn. In this case Russia will have earned an additional $43.6bn during 2022, for which Russian exports have risen to $113.2bn, an increase of $18.86bn on 2021.
Trade with rest of the EAEU (Armenia, Belarus, Kazakhstan and Kyrgyzstan) is up too, with reports that some of
Ben Aris in Berlin
Russia’s imports crashed after the invasion of Ukraine in February as Western trade partners “self- sanctioned” and simply cut supplies
to the country off while around 1,000 firms promised to pull out altogether, according to a report by Yale. But they have been recovering and are now expected to end the year down by only 10% as Russian firms find new suppliers in the east, or dodge the sanctions by using parallel import schemes.
As the war drags into its ninth month, Russian firms have been working hard to find alternative suppliers, and countries like Turkey, Azerbaijan and Belarus have stepped into the breach with exports
to Russia soaring to well above pre-war levels in the first eight months of this year compared to the same period a year earlier. Many of the more sophisticated products like semiconductors and high- quality machinery are still missing, but consumer goods and basic agricultural and industrial inputs have mostly reappeared.
“By September, Russian imports [had] offset a significant part of its losses,
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contributing to c.9% of the ruble depreciation since June. However, its further recovery is muted,” Natalia Lavrova, an analyst with BCS GM,
said in a note. “Hence the next wave
of the ruble weakening will be driven by subdued export[s] in response to the oil embargo [that is due to start in December] – the Russian currency may go as far as RUB64.5/$ by YE2022.”
Exports to Russia (USD)
Sources: National authorities/Macrobond, Patu 40108@ExportstoRussiaAsia