RUSSIA REPORTS HUGE TRADE SURPLUS.

Deputy Prime Minister Oleg Davydov has given a preliminary estimate of Russia’s foreign trade for 1996. (Nezavisimaya gazeta, January 14) It shows a huge surplus: $40 billion. Merchandise exports totaled $86.5 billion and imports $46.6 billion. The figures include trade with other former Soviet states as well as with the rest of the outside world but exclude "shuttle trade" — conducted by individuals shuttling back and forth across the border — which is estimated to amount to some $8 billion a year (all imports). (Izvestia, August 22, 1996) Including shuttle trade would bring the merchandise trade surplus down to something like $32 billion. The figures for officially-recorded trade are themselves quite likely to be revised, if previous years’ experience is any guide, so the "true" trade balance for last year is still far from precisely known. Even so, a large surplus will certainly remain.

Some commentators see this as a bright spot in Russian economic performance. The fact that exports have risen by almost 7 percent over 1995 is indeed good news for the Russian government. Both oil and natural gas exports are slightly up in volume — oil from 123.5 million tons to 127 million tons and gas from 195 billion cubic meters (bcm) to 200 bcm, reflecting a degree of stabilization of energy sector production. However, the large trade surplus is largely a product of the weakness of the domestic economy. Domestic demand is weak, so import levels remain modest and Russian producers are pushed to look to foreign markets. Indeed, the preliminary import figures suggest a slight decline (0.1 percent) from 1995.

Moreover, a trade surplus is of little benefit to Russia at this stage of its economic transformation. The economy urgently needs a net inflow of resources in the form of foreign investment and credits. That would support an excess of imports over exports, which could be a source of growth if the import bill included a large component of equipment and new technology.

Instead, there is still a large amount of capital flight: perhaps $12 billion a year. (Ekonomika i zhizn, No. 52, 1996) The inflow of foreign direct commercial investment appears to have fallen last year, to around $0.8 billion, and the disbursement of IMF and other loans falls well short of offsetting the capital outflow. Russian firms and individuals are still building up their assets offshore. These may be a source of investment finance if and when confidence in the Russian economy is restored but, for the moment, the money is still waiting outside of Russia.

More Youths Than Ever Dodging the Draft.