Publication: Monitor Volume: 7 Issue: 209

This year’s flagging export performance and the continuing surge in imports on the back of the sustained recovery in domestic demand is finally putting a sizeable dent in Russia’s enormous trade surplus. The trade surplus declined by 8.9 percent in January-August 2001, compared with a year earlier, but still amounted to a whopping US$35.9 billion, an estimated 17.4 percent of GDP. Exports were up by 3.3 percent in January-August, with exports to non-CIS countries increasing by only 2.2 percent. The economic rebound taking place in most of the CIS economies resulted in a 9.8 percent increase in exports to that region, but CIS markets take only about one-seventh of Russia’s exports in dollar terms.

Exports of oil and gas accounted for 51.3 percent of total exports in January-September 2001. Oil and gas exports are estimated to have grown by 3.1 percent. All other exports, however, grew by only 1.3 percent in the first three quarters. Crude oil exports were higher in value terms as increases in physical quantities more than offset lower prices on world markets. In contrast, sharply higher prices for natural gas exports compensated for the significant decline in physical volumes.

Imports increased 20.6 percent in the first eight months of 2001 to reach US$33.5 billion. Russian importers showed a strong preference for manufactured goods from outside the CIS as imports from that region rose 25.5 percent while imports from CIS countries rose 9.1 percent. The most important category of imports remains machinery and equipment, followed by food and raw materials for the food industry. In the first half of 2001, these two categories of goods accounted for 30.3 percent and 24.4 percent of total imports, respectively (Goskomstat, October 2001).

The current account registered a surplus of US$28.2 billion, down from US$33.4 billion in the first nine months of 2000. The US$5.2 billion drop in the current account surplus almost mirrored the US$5.2 billion decline in the estimated surplus on merchandise trade. The developments in the balances for non-factor and factor services were offsetting. The deficit on non-factor services increased from US$5.8 billion in the first nine months of 2000 to US$7.1 billion in the same period this year due to higher outflows on travel. The net outflows on factor services declined from US$5.5 billion in January-September 2000 to US$4.0 billion in the same period of 2001 as interest receipts rose by US$0.5 billion and interest payments declined by US$0.9 billion (Central Bank of Russia, October 2001).