CIS EXPORT PERFORMANCE FAILS TO EXCITE IN FIRST THREE QUARTERS OF 2001.

Even more so than in developed market economies, exports are crucial for economic growth in the CIS. Because many of these economies are small, gains from trade can be very large, making expansion of trade key for growth. In addition, industry often looms large in the makeup of these economies. Growth in industrial output and hence growth in GDP depends on increased exports. Trade data for Russia and Ukraine reflect the importance of exports in the two economies. The share of exports in GDP is higher in these two countries than in many larger developed market economies. For example, Russian exports run about 35 percent of GDP, and Ukrainian exports run close to 30 percent. Although exports remain relatively underdeveloped in many of the smaller countries, as shown by the record in developing countries elsewhere in the world, future growth in the smaller CIS countries will also be dependent on exports.

Despite a stellar year for GDP growth in the CIS in 2001, export figures for the first three quarters of that year are sobering. If they do not soon improve, the recent growth spurt in the CIS will come to an end. According to the CIS Statistical Office, total exports from CIS countries (excluding Turkmenistan and Uzbekistan, for whom no data are available) were up just 4.0 percent in the first three quarters of 2001 after double-digit growth in 2000 (www.cisstat.com, December 4, 2001). Exports to the Far Abroad were up just 3.0 percent, while exports among the CIS countries rose 8.4 percent. Although the very low growth to the Far Abroad was disappointing, a number of special factors reduced the rate of growth. First, Russia, which accounts for three quarters of CIS exports, has been experiencing a very sharp slowdown in export growth. Through the first three quarters of the year, exports were up just 2.8 percent. The slowdown in export growth was due to declining commodity prices and the effect of the real effective appreciation of the ruble in 2001 on the profitability of exports from Russian producers of metals and chemicals. Excluding Russia from the data, the rest of the CIS increased exports to the Far Abroad by 6.7 percent. Although not spectacular, in the context of a poor year for international trade, the rise in exports from CIS countries other than Russia was a better performance than by most other countries in the world.

Healthy economic growth in the CIS helped push up overall intra-CIS trade. Armenia, Kazakhstan, Moldova and Ukraine all reported double-digit growth in exports to the CIS. These rises were almost exclusively due to increased exports to Russia. Some other small countries had a more difficult time as Kyrgyz and Tajik exports fell sharply and exports from Georgia to the CIS were flat. Exports to the Far Abroad were also mixed. Armenia, Moldova, Tajikistan, and Ukraine registered healthy increases; exports from the remaining countries to the Far Abroad were flat.

Although exports usually receive the most attention, social welfare is a function of consumption and imports, not exports. Total imports rose 16.1 percent in the first three quarters of 2001, but imports from CIS countries other than Russia were up 9.3 percent while imports by Russia rose 22.7 percent. Changes in imports differed by country. Armenia, Belarus, and Kyrgyzstan reported declines as all three countries have had to curb current account deficits. In contrast, imports by Azerbaijan and Kazakhstan soared 10.2 and 34.9 percent, respectively, as the two countries spent some of their oil earnings. The oil importers have a taste for Western products. Imports from the Far Abroad rose 24.4 percent through the first three quarters to 2001, while those from the CIS were up 6.4 percent.

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