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Against the backdrop of Western sanctions, the country has managed to maintain a relatively stable global trade performance. This is the result of competent foreign economic state policy and active business position, experts say 

During two and a half years of the sanctions rally on the part of Western countries, Russia had to radically review and rebuild the structure of foreign economic activity. The topic of transition to a multipolar model of the world economy will be key for a number of sessions within the framework of the St. Petersburg International Economic Forum, which takes place from June 5 to 8. 

The international trade turnover of the Russian Federation last year, according to the Federal Customs Service (FCS), exceeded $710 billion. “Yes, relative to the pre-sanction year 2021, there is a drawdown of approximately 10% in trade turnover. However, it is necessary to take into account the high base effect, since this was the first year of recovery of the global economy after the COVID-19 pandemic,” explains Associate Professor of the Basic Department of Innovation and Industrial Policy Management of the Russian Economic University. G.V. Plekhanov Maxim Maximov. At the same time, relative to pre-pandemic 2019, the foreign trade turnover of the Russian Federation, according to him, increased by about 4%. 

The main current vector in the field of foreign economic activity for Russia, according to the Chairman of the Board of the Council for the Development of Foreign Trade and International Economic Relations Maxim Chereshnev, was the reorientation of the work model of Russian exporters and importers towards friendly countries. 

At the end of 2023, China, with a trade turnover of $240 billion, became our country’s main trading partner by a multiple margin, Dmitry Kuvalin, Deputy Director of the Institute of National Economic Forecasting of the Russian Academy of Sciences, refers to FCS data. In second place is India, trade turnover with which almost doubled in just a year and amounted to $65 billion, the expert continues. Turkey, Belarus and Kazakhstan follow with figures of $56 billion, $55 billion and $26 billion, respectively. 

The volume of bilateral trade between Russia and Brazil and Uzbekistan has increased significantly, notes the deputy director of the INP. In particular, with Brazil, according to the Ministry of Economic Development of the Russian Federation, both in 2022 and in 2023 it amounted to $8.4 billion, which is a historical record. According to the Statistics Agency of Uzbekistan, last year this country supplied goods worth $3.3 billion to the Russian Federation, purchased goods worth $6.5 billion, and in total trade turnover increased by 30% compared to 2022. The leadership of the two countries plans to double it in the coming years. 

Data from the international trade statistics database ITC Trademap indicate that the main consumers of Russian goods in 2023 were China (37%), India (14%), Turkey (13%), Brazil (3%). Among the key suppliers of goods to Russia in 2023: China (57%), Turkey (6%), Germany (5%), Italy and the Republic of Korea (3% each). Director General of the analytical Agency for Transformation and Economic Development (ATRE) Vladislav Onishchenko clarifies that the shares are indicated in relation to the total volume of trade only with those countries for which information is in the database. 

In the context of macro-regions, the key partners of Russia are Asian countries, says Vladislav Onishchenko, also citing data from the Federal Customs Service: “If in 2022 the shares of Asian countries in Russia’s exports and imports were 49 and 57%, then in 2023 - 72 and 66%. Based on the results of January-March 2024, these indicators reached the levels of 75 and 67%, respectively.” Also, according to him, the role of African countries in Russia’s foreign trade is growing, whose share in the structure of Russian exports at the end of last year increased to 5% from 2% in 2022. Imports remain at 1% for now. Among African countries, Egypt, Algeria, Morocco, Tunisia, and Libya became key trading partners. According to Maxim Chereshnev, the United Arab Emirates, Malaysia, Indonesia, and Vietnam are also “in the foreign economic trend” for Russia now. 

Germany, which had the second largest foreign trade turnover with our country in 2021 (almost $57 billion) after China (more than $140 billion), ended last year in seventh place with a result of $12.2 billion, notes Maxim Maximov, citing official data customs statistics, and the Netherlands, which ranked third in 2021 ($46.4 billion), closed the top ten in 2023 with a total turnover of $9.9 billion. 

Dmitry Kuvalin notes that these are still quite large trade volumes. Notable, according to him, are the indicators of trade turnover between the Russian Federation and South Korea - $15 billion, Japan - $10 billion. Official figures, according to the expert, do not always relevantly reflect the true state of affairs: “In fact, many companies from Western countries do not want to lose Russian market and continue to trade with the Russian Federation, bypassing sanctions through third or fourth countries.” He believes that the real share of many Western countries in Russian foreign economic activity is noticeably higher than government statistics. 

How changes in foreign economic activity affect the Russian economy 

The change in the structure of foreign trade flows caused by sanctions created and still creates many problems for the Russian economy, admits Dmitry Kuvalin. In particular, in a survey conducted by the Institute of Economic Forecasting of the Russian Academy of Sciences at the end of 2023, 60% of respondents noted continued difficulties in obtaining the necessary imported raw materials and components. “This is about 10 percentage points lower than in 2022, but still very high,” comments the deputy head of the institute. Another 24% of surveyed enterprises indicated difficulties in exporting their products caused by sanctions, 21% of respondents noted difficulties in importing the necessary technologies.

Restrictions on imports of high-tech products from Western countries, according to Dmitry Kuvalin, remains a pain in the Russian economy. Now we replace such products mainly Chinese counterparts, sometimes suitable solutions are in India, Vietnam, Malaysia. This often leads to a certain loss of quality, but still allows not to stop the key production processes», - comments the expert. 

Nevertheless, the Russian economy and business are gradually adapting to the new realities. As an example, Maxim Cherishev calls the abundance of Chinese cars on Russian roads, which have replaced the gone European, Japanese and American stamps: «A similar situation will develop in other industries: Western products will be replaced by goods from friendly countries, as well as domestic production». The expert expects strengthening of the process of localization of production capacities of companies loyal to Russia on the territory of our country. 

According to surveys by the Institute of Economic Forecasting of the Russian Academy of Sciences, at the end of 2023, 35% of Russian enterprises continued to actively search for new foreign counterparties. With some countries, for example with China, Belarus and Iran, the growth of mutual trade turnover already reflects not only logistical changes, but also the expansion of bilateral production cooperation, explains Dmitry Kuvalin: “In other words, we have more joint ventures.” 

At the same time, in the case of the export of raw materials and energy resources Russia did not have to look for complicated solutions, continues the expert: For example, shipments of Russian diesel fuel to Brazil in 2023 were almost 60 times higher than in 2022, reaching 6.1 million tons. Also last year, Russian shipments of coal and fertilizers to India and China, oil products and timber materials to North Africa, gas, metallurgical and agricultural products - to Turkey». 

Against the backdrop of the reorientation to the east and south, the need to expand the capacity of transport and logistics infrastructure for exports and imports has increased dramatically, experts say. Some of these projects - hubs, terminals, dry ports, border checkpoints - are already being implemented, in particular, in the Far East, says Vladislav Onishchenko. Priority tasks - implementation of the project of the international transport corridor «North - South», which is the main route for the transport of goods from India, South-East Asia, Africa and the countries of the Middle East to Europe and back, bypassing the Suez Canal, as well as increasing the competitiveness of transport and logistics corridors in the Azov-Black Sea and eastern directions. 

According to Maksym Maximov, the relevant decisions require significant costs and, importantly, do not depend entirely on the Russian side: «The current transit opportunities, such as Azerbaijan, Kazakhstan or Iran, are extremely insufficient to solve the problems of reforming the logistics of Russian foreign trade». At the same time, Vladislav Onishchenko says about the growing interest of foreign partners to participate in the North-South ITC project. In recent months this has been stated by official representatives of countries such as Oman, Afghanistan, Qatar, and Iran. 

What are the prospects for foreign economic activity 

External pressures and sanctions have created additional incentives for the development of integration processes. «In particular, within the framework of the Eurasian Economic Union (EAEU) the calculations in national currencies expanded - at the end of 2023 their share amounted to about 90%», - refers to expert estimates by Vladislav Onishchenko. Also in the national currencies, according to him, the bulk of the payments in trade with China and India - about 95%. According to experts, the trend of dedollarization in global trade will only intensify in the future. 

In general, the experts interviewed by the editors of RBC Industry positively characterize the integration processes and their continuation within the framework of international formats - BRICS, SCO and EAEU. They also note the important role of the state in terms of developing international cooperation, creating appropriate infrastructure - transport and logistics, payment, investment, as well as supporting and stimulating exporters and importers. According to Vladislav Onishchenko, Russia needs to take all measures to develop unrealized export potential (NEP), which has formed in the markets of foreign countries. For example, according to ITC, in the Chinese market the NEP of Russia is estimated at $18 billion, Turkey - $5.4 billion, India - $5.1 billion, Bangladesh - $3.2 billion. “These are mainly the following types of goods: metals, fertilizers and chemical products, plastic and rubber products, fish products - for China, vegetable oils - for India, wheat - for Bangladesh,” comments the general director of ATRE. 

The search for opportunities to attract investment from friendly countries has become a hot topic against the background of sanctions, says Vladislav Onishchenko. One of these opportunities, according to the expert, is related to the initiative to create International Priority Development Territories (IDA). “The goal is to create new production facilities for high value-added products and attract investment from foreign investors. This can contribute to both a change in the structure of the economy of the regions where they will be located, and the country as a whole - towards the complication and expansion of production with high added value,” the expert comments. 

Earlier, RBC reported that the Russian authorities, represented by the Ministry of Finance of the Russian Federation, are considering simplifying the procedure for registration of a legal entity for investors from other countries, including unfriendly ones.

Source: https://www.rbc.ru/industries/news/66602d249a794737ed559371?page=tag&nick=ved