What does Russia export

Russia's exchange of goods is changing geographically and structurally

The turnover of Russian foreign trade is far from the record year 2013. At that time the volume was 842 billion US dollars (US $). Since then, the exchange of goods with other countries has suffered from falling raw material prices, sanctions and economic crises. In 2019, Russia traded goods worth US $ 674 billion - a fifth less than in the record year. Nevertheless, the foreign trade surplus remained high because imports fell as sharply as exports.

The corona pandemic will have a significant impact on the movement of goods in 2020. The dramatic drop in oil prices at the beginning of the year, the global decline in demand for energy sources and the mild winter of 2019/20 are causing export earnings to melt. According to customs statistics, exports fell by 22 percent between January and May 2020 and imports by only 7 percent. The rapidly increasing gold price is having a positive effect: According to the central bank, Russia achieved higher export revenues with the precious metal than with natural gas in the 2nd quarter of 2020.

Russia's foreign trade in a five-year comparison (in billion US $)

2014

2019

Change in 2019/2014 in percent

Imports

286,65

247,16

-13,8

Exports

497,83

426,72

-14,3

Trade balance

211,19

179,56

-14,0

China is expanding its lead

China has been Russia's most important trading partner since 2010. In 2019, 16.6 percent of goods traffic was handled with the Middle Kingdom. The corona crisis is accelerating this trend: In the first five months of 2020, China's share was already 17.8 percent.

Germany, which was Russia's largest trading partner for many years, is now in second place. It is followed by the Netherlands, which play an important role as a transshipment point for Russian raw material deliveries (port of Rotterdam).

European Union's share is shrinking

The EU and US sanctions that have been in force since the annexation of Crimea in 2014, as well as the Russian counter-embargo on Western food, have reduced the importance of many European countries as Russia's trading partners. In addition, the lower oil and gas prices mean that Moscow generates fewer export earnings in Europe.

New losses are already looming: the EU's "Green Deal" provides for a climate tax on imported products from 2021 depending on their CO2-Footprint before. This CO2-Border adjustment levy is to be levied on imports from third countries that do not tax greenhouse gas emissions at all or only slightly tax them. The CO2- Border tax would cost Russian exporters from emission-intensive industries such as metallurgy, cement production and chemicals € 2.8 billion to € 3.6 billion (RSPP estimate) and US $ 3 billion to US $ 4.8 billion (BCG estimate) annually. Because Russia's most important export goods often have a bad CO2-Balance sheet. If negotiations with the EU are unsuccessful, Russia is considering initiating proceedings against the EU at the World Trade Organization (WTO) and taking retaliatory measures, reports Kommersant.

Chinese manufacturers, on the other hand, benefit from their low prices, which are an unbeatable selling point for Russian customers in times of economic downturn and a weak ruble. Conversely, Russia has expanded its raw material deliveries to the Middle Kingdom with the help of new pipelines.

Despite China's steep rise, the EU remains Russia's overall preferred trading partner, even after Brexit. The 27 countries of the Union (excluding the United Kingdom) had a 39 percent share of Russian foreign trade in 2019. They accounted for around 34.7 percent of imports and 41.6 percent of exports. The five EU members Germany, Italy, France, Poland and the Czech Republic together delivered a similar amount of goods to Russia in 2019 as China (value of goods).

Neighbor Belarus is a close trading partner

Belarus is the preferred trading partner among the former Soviet republics. The country is one of five members of the Eurasian Economic Union (EAEU). The countries of this customs union accounted for 8.6 percent of Russian foreign trade in 2019 (2014: 7.1 percent).

Ukraine is no longer of any importance as a trading partner

The conflict with Ukraine is leaving a clear mark on the trade balance. Their share in Russia's trade in goods has more than halved since 2014 and was only 1.7 percent in 2019.

Russia imports less food, cars and machines

Russia's import volume has shrunk significantly in the past five years. In 2019 it was still 14 percent below the value in 2014. The reasons are the weak economic development, the lower income from raw material sales and the import substitution pushed by the government. When it comes to public tenders and the award of subsidies, Moscow is paying more and more attention to the fact that Russian products are procured. The decline in imports between 2014 and 2019 was particularly pronounced for food (-29 percent), road vehicles (-24 percent) and machinery (-23 percent).

Localization trend negatively impacts trading volume

The food industry benefits in particular from the Russian import embargo and the weak ruble, which makes imports more expensive. When it comes to vehicles, Russia has succeeded in persuading many foreign manufacturers to manufacture locally, including Volkswagen, BMW and Mercedes-Benz.

Nevertheless, the country remains dependent on foreign technology. It is required for the development and extraction of deposits, for the processing of oil and gas, for transport, power generation and for the expansion of the infrastructure. However, machines and equipment are no longer the most important group of goods for imports. Chemical products now have this top position. Electronics are also gaining in importance because Russia is pushing ahead with digitization, building data centers and expanding electronic administration.

Imports by product group (in million US $)

Product group

SITC code *)

2014

2019

total

286.649

247.161

machinery

71-74

47.555

36.864

Chemicals

5

37.362

38.587

Pre-products

6

36.149

30.822

Finished products

8

35.267

29.417

electronics

75, 76, 776

22.866

23.521

Road vehicles

78

30.855

23.394

Food / live animals

0

31.515

22.321

Electrical engineering

77 minus 776

15.181

13.825

raw materials

2

8.910

9.654

Rail, water and air vehicles

79

10.602

8.033

Drinks / tobacco

1

4.270

3.903

miscellaneous

9

861

3.605

Mineral fuels

3

4.039

1.953

Animal / vegetable oils

4

1.215

1.264

Non-raw material exports are increasing

For many years Russia has wanted to diversify its economy and reduce its dependence on oil and gas exports. As part of the national project “International Cooperation and Export”, it is planned to increase exports of industrial goods to US $ 205 billion by 2024. This should be achieved above all with chemical products and pharmaceuticals, machines and wood processing products.

In addition, the agriculture and fishing industries are said to sell products abroad for US $ 100 billion. Russia intends to generate a further US $ 100 billion in export revenues from the export of services (transport, tourism, IT and financial services). Due to the difficult economic situation, the achievement of goals for the national projects was postponed from the end of 2024 to 2030.

Oil and gas still dominate Russian export statistics. Mineral fuels accounted for 52 percent of export revenues in 2019. Five years earlier it was 70 percent, but this was primarily due to the higher raw material prices at the time.

Overall, Russia is well on the way to broadening its export base. According to the Russian Export Center (REZ), goods outside the raw materials and energy sector were exported to a record value of 154.4 billion US $ in 2019. The five main customer countries were China, Kazakhstan, Belarus, Turkey and the Netherlands. According to REZ, exports from the non-raw material and energy sectors accounted for 36.5 percent of total exports in 2019.

Export by product group (in million US $)

Product group

SITC code *)

2014

2019

total

497.834

426.720

Mineral fuels

3

346.119

221.689

miscellaneous

9

14.772

61.409

Pre-products

6

52.753

53.396

Chemicals

5

23.517

21.721

Food / live animals

0

12.456

20.381

raw materials

2

15.888

17.819

machinery

71-74

7.647

8.410

Finished products

8

6,238

5.514

Rail, water and air vehicles

79

2.752

3.339

Road vehicles

78

3.194

3.751

Electrical engineering

77 minus 776

2.490

3.013

Animal / vegetable oils

4

2.102

3.257

electronics

75, 76, 776

4025

3.080

Drinks / tobacco

1

1.301

1.109