其他服務業Business News

The low share of wages and the artificially undervalued ruble mean that total purchases of imported goods are almost a third less than the volume of Russian exports. The difference between exports and imports settles abroad, and in this sense our country traded at a loss in 2023. 

But to the benefit of certain influential groups. This year Russia will export goods worth 420 billion dollars. And it was imported for only 285 billion, calculated by the Gaidar Institute.

In 2023, Russia has returned to the traditional indicators of exports exceeding imports. Last year, 2022, the export of resources from the country by uncompensated imports exceeded $250 billion. Such a net export of goods from the country has never happened before in history. But in 2023, exports and imports of goods generally return to the average levels of the years before the pandemic and the special military operation. 

"Export performance has been volatile in recent years. Export volumes contracted significantly during the pandemic (relative to the base year 2019), after which they moved to sustainable growth due to the rise in energy costs due to the recovery of global demand," the report on foreign trade of the Russian Federation in 2023 notes. Alexander Knobel, Head of the Gaidar Institute’s International Trade Laboratory, and Alexander Firanchuk from the International Trade Research Centre of RANEPA and RGS, gave preliminary estimates of exports and imports. According to them, the overall instability of 2022 increased the influence of the price factor, leading to record export values in the middle of the year, after which the correction phase began. 

Starting from the first quarter of 2023, Russian export volumes returned to pre-Covid 2019 levels. In general, for 2023, export volumes are projected at $420 billion, which is 29% lower than the 2022 value and 15% less than the 2021 volumes, economists note. 

Imports of goods into Russia by the end of 2023 are predicted by the authors at the level of $285 billion. Thus, the difference between the export and import of goods into Russia will be about $135 billion. 

But how is it that Russia as a whole conducts foreign trade at a loss? After all, the average annual indicator of uncompensated export of goods from our country is more than 100 billion dollars. Such an imbalance is facilitated by an artificial decrease in the purchasing power of the population at the expense of low wages and an abnormally low exchange rate of the ruble. That is why Russians as a whole can buy much less imported goods than sold resources abroad. 

Over the past six years, the Russian Federation’s net merchandise exports amounted to about $120 billion (cf. "NG" of 24.12.22). This amount was distributed between the growth of state reserves (the so-called airbag) and the placement of private Russian assets in Western countries. But with the outbreak of conflict with the Western union, these two avenues of export revenue have proved meaningless. The Government of the Russian Federation has continued and continues to encourage the non-reimbursed export of resources from the country. 

However, wages are low. The share of wages in the country’s GDP has been declining in recent years, from 48% in 2015 to 39% in 2022, which is lower than in most developed countries (cf. "NG" of 07.11.23). 

The share of labor compensation in the cost structure of enterprises over the past decade has not grown, but decreased: from 28% of output in 2013 to 22% in 2022. 

Another important factor artificially restraining the purchasing power of the population is a weak ruble. The International Monetary Fund estimates a fair rate of purchasing power parity of about 34 rubles per dollar (cf. "NG" from 11.05.22). The bigmac index gives a fair exchange rate of about 25 rubles. per dollar. Thus, imported goods in rubles are much more expensive in our country than the fair price. And it is this factor that ensures low rates of importation of goods in exchange for externally sold resources.

 Russian imports declined during the pandemic below the 2019 baseline. After the weakening of anti-reflective measures, the volume of goods imported into Russia in 2021 exceeded the baseline, including because of the increase in global inflation and the effect of delayed demand. 

"The outbreak of hostilities, sanctions and logistical restrictions have led to a significant reduction in imports, however, the recovery began in the third quarter of 2022, which is partly due to the significant strengthening of the ruble in this period," - said Knobel and Firanchuk. The first quarter of 2023 was a record year, with imports reaching 135% of the same level in 2019. After that, due to the depreciation of the ruble and the exhaustion of the effect of delayed demand, the quarterly volume of imports returned to the baseline levels of pre-2019. " A significant proportion of goods, including through parallel imports, continue to be delivered at higher prices due to additional logistics and transaction costs, as well as sanctions risks, i.e., the volume of imports is now lower than the volume of imports in 2019. Nevertheless, we can talk about overcoming the import crisis for most commodity positions, and the weak current dynamics is explained by the weakening of the ruble rate," - economists say. 

However, despite the relative growth of imports, its volumes were consistently about a third lower than exports from the Russian Federation during the same period.
 The high revenues from the export of Russian goods in 2022 require two explanations. First, although exports are valued in dollars, in fact most of the merchandise shipments were paid in non-convertible currencies, creating problems for both exporters and the economy as a whole. And secondly, the Russian Federation’s export revenues were largely provided by the cartel agreement of the OPEC+ member states. It was the agreed limitation of oil production that provided the Russian Federation with a relatively comfortable level of export and budget revenues. However, this factor may weaken in the near future due to a reduction in the share of OPEC+ countries in global production. 

The OPEC+ oil reduction deal, in which Russia participates, has already brought an additional 30 trillion rubles to the Russian budget. Director General of the Russian Private Investment Fund (RFI) Kirill Dmitriyev said on Monday. According to Dmitriev, the OPEC+ deal can be called one of the most important deals for the world over the past 20 years. He noted that it is important not only for energy producers and consumers, but also for the Russian budget. Recall that the agreement itself was forced by the exporting countries after world oil prices turned negative in March 2020 amid a slowdown in global demand due to a coronavirus pandemic. 

According to the head of the RFPI, the additional revenues of the Russian government from the OPEC+ transaction have already exceeded the cost of 300 billion dollars. State assets that have been frozen in Western Union countries. " All of this is the result of Saudi Arabia’s very close and trusting cooperation with other OPEC members. Russia, Saudi Arabia, other OPEC+ countries show an example of constructive creative cooperation, which is useful to the whole world," said Dmitriev. The agreement has been extended several times and its parameters have varied according to the international oil market. At the OPEC+ meeting in June 2023, the OPEC countries agreed to extend the agreement until the end of 2024. 

Russia may also benefit from a collective refusal to supply oil to India for non-convertible Indian rupees. On Monday, Indian sources reported that oil exporters in the country refused to pay for rupees. India’s attempts to use the national currency to pay for oil imports have not met with the support of most suppliers. This is stated in the report of the Ministry of Oil and Natural Gas of India submitted to the Parliament of the Republic. " Despite some success with oil purchases from several countries paying in rupees, exporters still avoid transactions using the Indian currency," quotes the Business Standard report of the Indian Ministry. 

According to the head of "Transneft" Nikolai Tokarev, the Russian Federation has taken to India about 70 million tons of oil. It is difficult to know exactly how much of this amount was not paid in convertible currency. However, Russian oil companies note that "since the beginning of the strengthening of sanctions by the Bank of Russia, reliable routes for the execution of cross-border payments in various currencies have not been established, making it difficult to transfer export proceeds on time".

Source: https://www.tks.ru/reviews/2023/12/26/01/print/