Russia's record trade surplus in the second quarter

Russia's record trade surplus in the second quarter of 2022 is half due to falling imports, including high-tech, and half due to rising energy prices: Bruegel experts reconstructed Russia's trade balance based on data from 34 jurisdictions, which account for three-quarters of Russian exports and import. The official publication of these data has been discontinued. Russia's trade surplus with the 34 countries studied in the second quarter of 2022 amounted to $95.6 billion compared to $35.5 billion in the same period of 2021. According to Bruegel, half of this almost three-fold increase is due to an increase in prices for exported mineral fuels (gas, oil , coal), and the second half - a drop in imports, which decreased by 44% due to both sanctions and difficulties in paying for them for Russian companies. Thus, imports of five categories of sanctioned goods (including transport, electronic, telecommunications equipment) from 34 jurisdictions decreased by 70%, including those from China, India, and Turkey that did not impose sanctions (for example, from China – by a third)1. Cumulative imports from China and India also declined, but increased from Turkey, hitting a high since 2019 at $0.8 billion in June (about 7% of total imports for the month). The collapse of both imports of sanctioned goods and imports in general began in March 2022, and its slight recovery in May-June due to, perhaps, the strengthening of the ruble does not change the overall picture, Bruegel experts believe. A fall in equipment and technology imports is likely to undermine Russia's ability to produce high-tech products, they write.

Against the backdrop of falling imports, Russian exports in the second quarter of 2022 were 43% higher than in the same quarter last year, primarily due to fuel exports - revenues from it increased by 56%, follows from Bruegel's calculations. The growth was due to higher energy prices: for example, physical deliveries to the EU decreased by 20%, while cost ones increased by 57%. Mineral fuel exports to the US and the UK dropped to zero by June 2022, supplies switched to India and China: for example, from February to June 2022, they increased to India from $0.3 billion to $3.7 billion, or more than tenfold, to China - more than one and a half times from $4.6 to $7.2 billion. Against the backdrop of a rebalancing of deliveries, the share of China in Russian exports increased from 20% to 23%, Turkey - from 7.5% to 12%, India - from 2% to 7%, i.e. the combined share of these three countries increased by 1.4 times from almost 30% to 42% (second quarter of 2022 versus the same quarter of 2021). However, at the end of the second quarter, Russia's largest sales market remained the EU, which accounted for 52% of Russian fuel exports and 48% of total exports. With a record foreign trade balance, exports from Russia in value terms have been declining since spring, from March to June 2022, declining by 13%, including fuel - by 7.5%, non-fuel - by 19%.

Retelling - [@Econsonline]

Last Thursday I recorded a podcast with Natalia Zubarevich. Minor spoiler: tech imports came from China, the available data shows. This week there will be a conversation with Yitzchoki, I think that next week - with Natalya Vasilievna.

Grigory Bazhenov 2022-09-13