Russian export through 2020-2022
Bogdan Fomichev
Time between 2020 and 2022 will certainly remain remarkable in the history of Russian Federation and probably in the history of humanity in general. Self-evident that the events that happened in this time period have impacted the trade with other countries and consequently trade balance and profile of the country itself. The fluctuations of the product export during these years is extremely fascinating and probably of worthy of writing a book on how different events of the world history can influence the trade balance of a country or even countries.
Yet in order to understand and explain the origins of these fluctuations it is necessary to take a broader look at the events and include in the analysis 2019, since it was the last year before such major events in the global economics as COVID-19.
In the year of 2019 the world has experienced several major economic troubles, the most important of which were the trade struggle between China and the US, and Brexit that caused some increased complexity in the trade routes across the world and the worst increase of global economy since the 2008 crisis. Moreover, Russian Federation has experienced a contraction in its export by 6% according to the report published by the Ministry of Economic Development of the Russian Federation. Moreover, out of the 422.8B USD of exports, less than 15%.
This information gives an understanding that for the Russian economy the contraction of an export, due to various political flows, was an on-going process that was terrifically severed by the pandemic, rather than initiated. Russian economy that was relying mainly on the exports of it’s goods, in 2020 became a victim of broken by the pandemic supply-chains. Even more the on-going political trade confrontation of China and the US, coupled with the increasing political tensions with the main trade partners of the country itself have resulted in the Russian total export plummeting from the mentioned 422.8B USD to around 337.1B USD, according to the data provided by the ITC. The results of these events were terrific for the economy, as it has severely contracted, mainly due to the damage to small and medium businesses. What is more interesting however is that despite such a severe contraction in the total amount of products that had been exported, the contraction in the service sector was from 62.8B USD in 2019 to 48.6B USD in 2020. This might seem normal, since the goods sector had experienced a much more significant nominal drop of 71.5B USD, yet the percentage of drop in the export of goods was only 19.86%, while the percentage drop in the export of services reached 22.6%! This looks like an abnormality, since many of the services are now done online and therefore should be less affected by the issues of supply-chains. Well, the reason for this abnormality is that Russian export mainly consists of resources, dominant part of which are energy resources. These are crucial for any economy to run and Russian Federation being one of the main exporters of these resources continued to export them, at lower amounts, yet significant enough. On the contrary, industries like transportation of regular goods, tourism and other client-oriented businesses were experiencing a crisis, therefore causing more significant fall percentage-wise.
However, the countries and the world economy has adapted itself to the pandemic and after the recession of 2020, had started its recession. The total trade in the world had increased and so had the export of the Russian Federation. Within a year it had increased by 155.2B USD, showing not only a recovery, but actually an expansion in comparison to the last pre-pandemic year. This happened due to a larger economic interaction with the Chinese economy, an overall relief of political tensions between the countries and recovery of many trade routes.
In 2022 the political tensions between Russian Federation and many countries of the world, of which many were it’s main importers, had increased dramatically causing a severance of many previously reliable economic relations which should have indicated that the country had to lose on a significant amount of it’s export earnings and show a contraction of it’s recovery from the COVID-19 crisis. However, the reality had shown these forecasts to be wrong. Russia’s export had not only remained stable, but in fact it had a significant raise, according to the same ITC, from 492.31B USD to 577.79B USD. However, the actual figure of the exported products is higher, because in order provide comprehensive set of data, ITC had used a technique of mirroring the data and this technique some of the trade relations of the Russian Federation. For example with North Korea.
This trend can be explained by three reasons. The first one is that the trend of countries recovering from the effects of pandemic has not finished and this recovery is quite rapid all across the world. Russian economy, despite being under severe sanctions was not completely removed from this economy, due to its importance in the sector of energy. More than this, the energy sector of Russian Federation, the main source of export income of Russian Federation had experienced significantly weaker restrictions than others.
Another significant contribution to this trend is that the country had successfully changed it’s main old export partners, like the United States and the United Kingdom to China and Turkey. These countries had become the main export partners of the country in 2022, amounting for almost 30% of Russian export.
Last, but not least, the country had not lost some of it’s main export partners of the past like Germany. Germany for many years was dependant on the energy resources from Russia and was unable to switch itself to some other alternatives, being therefore forced to stay with Russian energy resources in order to avoid an even higher raise in energy prices.
