Category Archives: Russian imports

30/1/16: Russian Trade Balance in Goods: 2015

On foot of my note covering Russian preliminary estimates for external trade, some readers asked if the figures provided (see here: http://trueeconomics.blogspot.com/2016/01/23116-russian-external-balance-2015.html) were indeed in Rubles. The answer is no - these are US Dollar amounts at the exchange rate posted time of data release (so preliminary figures are subject to change due to exchange rates effects as well as data updates).

As with all national statistics everywhere, Russian data has better coverage of goods trade, than services trade. Services trade generally lags goods trade in terms of reporting for a range of reasons that are reflected in all countries accounts. While we have only estimates for services trade through November 2015, we have actual figures for goods trade through the same period. These are reported by the Central Bank of Russia and provided below.

For 11 months (January-November) of each year, Russian exports of goods (only) fell from USD459.381 billion in 2014 to USD311.934 billion in 2015 - a decline of 32.1% y/y and a drop of 34.9% on comparable figure in 2012. Meanwhile, imports of goods (only) fell from USD283.541 billion in 2014 to USD176.652 billion in 2015 -a decline of 37.7% y/y and a drop of 41.9% on 2012 levels.

As the result, Trade Balance (goods only) for 11 months of 2015 fell from USD175.84 billion to USD135.582 billion - down 23.1% y/y. The Trade Balance (for 11 months cumulative) was down 22.8% on 2012 levels.

We can, with some stretch of imagination, extrapolate 11 months figures to full year. To do this, we adjust the figures for seasonality (December imputed weighting in trade volumes across both exports and imports).

If we do so, full year exports of goods for Russia come in at around USD342.9 billion down 31.1% y/y, while imports come in at USD194.32 billion, down 36.9% y/y. Trade balance for the full year 2015 (goods only) comes in at around USD147.6 billion, down 22.2% y/y, making 2015 the lowest trade surplus year (goods only) since 2010 when trade balance stood at just under USD147.0 billion.

Charts to illustrate the dynamics based on imputed full year values (note: horizontal lines are period averages):

For what it is worth, it might be interesting to make a comparative between 2015 levels of external trade and pre-2000 era. Average exports of goods in 1994-1999 were USD79.4 billion and 2015 levels were 4.3 times higher. Average imports of goods in 1994-1999 were USD58.45 billion and these rose 3.3 times in 2015 figures. As the result, average 1994-1999 trade balance was USD20.95 billion. 2015 trade balance was 7 times larger than that.

Not too shabby numbers, event though 2015 was a tough year of trade for Russian exporters.

23/1/16: Russian External Balance 2015

At the end of 2015, based on the preliminary estimates of 2015 balance of payments statistics from the Central Bank of Russia, Russian trade volumes with the rest of the world stood at just under 2010 levels. This is hardly new, as 2010 values of trade - both for exports and imports of goods and services - have been breached back in 3Q 2015. This erases gains between 2010 and 2013 (with 2013 posting all-time record high volumes and values of trade flows)

In 2015, exports revenues fell more than 30% in USD terms and 17% in Euro terms year on year. Imports expenditures fell 35% in USD terms and 22% in Euro terms. Perhaps somewhat surprisingly, 4Q figures came in broadly in line with annual figures. This is surprising due to imports and exports-lifting seasonal effects.

As exports shrunk less than imports, current account surplus actually rose both in level terms and relative to GDP. At the peak trade year of 2013, current account surplus was USD35 billion, rising to USD58 billion in 2014. 2015 preliminary estimate puts full year current account surplus at USD66 billion. Relative to GDP, current account surplus rose from 1.7% in 2013 to 5.4% in 2015.

These are remarkable figures, reflective of both devaluation of the ruble, the ability of the economy to take on imports contraction, and the relative resilience of exporters. Exports of goods and services were down massively, still, from USD593 billion in 2013 to USD389 billion in 2015. While trade balance in Goods fell from USD182 billion in 2013 to USD146 billion in 2015, trade deficit in services shrunk from USD58 billion in 2013 to USD37 billion in 2015.

The key to overall balance improvements, however, was in the category of “Other Current Account” - covering foreign earnings expatriation from Russia - here the deficit of USD89 billion in 2013 fell to USD76 billion in 2014 and to USD43 billion in 2015. Similarly, on the balance of payments side, “Fictitious Transactions” line of balance - covering Russian corporates exports of capital from Russia - fell from USD27 billion in 2013 to USD9 billion in 2014 and USD 1 billion in 2015. Balance of payments for Private Sector also improved, dramatically, with deficit of USD63 billion in 2013 ballooning to a deficit of USD152 billion in 2014 before falling to a deficit of USD57 billion in 2015.

BOFIT provides a neat summary table of latest Balance of Payments breakdown figures for 2013-2015:

Source: BOFIT

16/5/15: Russian Trade in Goods: 1Q 2015

Per BOFIT latest data, exports of Russian gas were down 10% y/y in 2014 with total of 175bn cubic meters (bcm) of gas exported. exports to Ukraine were down 44% to 15bcm, to Europe and Turkey down 9% to 126bcm. Russian LNG exports stood at around 14bcm in 2014, virtually unchanged on 2013.

Meanwhile, the latest figures for external trade, covering 1Q 2015 show exports of goods down 28% y/y (predominantly due to price effects - ruble devaluation and lower prices charged). Volume of exports actually rose across several categories, including crude oil (+13% y/y in volume), petroleum products (+24% y/y in volume), as well as exports of copper, fertilisers and grain. Share of oil and gas in overall exports remained largely unchanged at around 2/3rds.

Biggest volume of exports went to the EU, as usual, although value of exports shipped to the EU fell by roughly 1/3rd. Overall, EU received about 1.2 of Russian goods exports with APEC taking 20%.

On imports side, the opposite holds: APEC became the largest supplier of goods to the Russian market as imports from the EU dropped 44% y/y in 1Q 2015 more sharply than the overall imports decline of 37% y/y. Imports from China fell by 1/3rd, but China remained the largest single supplier to the Russian markets with 20% share of overall Russian imports of goods.

Ireland's bilateral trade in goods with Russia also suffered in 1Q 2015. Per latest CSO data, released this week, Irish merchandise exports to Russia totalled EUR78mln in 1Q 2015 against EUR157mln in 1Q 2014 - a 50% drop y/y. Irish merchandise imports from Russia totalled EUR52mln over the 1Q 2015, down only 1.6% y/y. As the result, trade balance (merchandise trade only) has deteriorated significantly: in 1Q 2015, Irish trade surplus vis-a-vis Russia stood at EUR104mln, this has now declined to EUR26mln (a drop of 75% y/y).

It is worth noting that in 2008-2009, Irish merchandise exports to Russia declined 30% y/y over 1Q-4Q period.

8/4/15: Ruble’s Gains Are Convincing, But Risks Remain

Three charts:

Russian car sales

Source: @moved_average

Down 42.5% y/y in March (estimated 43% decline).

Ruble v Dollar is going up and up:

Source: @Schuldensuehner

Ruble v Euro is also up and up...

Source: @Schuldensuehner

Linking all three? The myth of Ruble liquidity squeeze (e.g. here and here). Reality: sharp drop in imports, slight improvement in oil prices (and more importantly stabilisation of the trend to the upside) and improving conditions in the domestic banking sector are all driving ruble value up.

Another strong contributing factor is timing of external debt redemptions:

Source: https://www.tradingfloor.com/posts/pop-goes-the-rouble-4296859

These are now past their 2015 peaks.

All positive, but uncertainty remains and is still extremely high, so I would not be surprised if ruble starts posting some losses in and around the end of Q2.

26/3/15: Russian imports outlook 2015-2016

Per BOFIT, Russian imports "will react strongly in 2015, partly dragged down by the economic contraction" and in part by weaker ruble and continued counter-sanctions. Import volumes adjust sharply during Russian recessions: in 2009 imports volumes fell 30% as GDP contracted by 8%. However, current Ruble is in a weaker position than in 2009: "the real exchange rate of the rouble has now depreciated much more than in 2009: it is a quarter weaker than the average rate for 2014. Russia’s income on exports, which dropped by a third in 2009, will deteriorate under the forecast oil price assumption[USD55 pb], by almost a quarter in 2015."

All of this means that Russian "imports will have to adjust to the smaller export income even more than usual [more than in 2009], since it would be difficult to fund a current account deficit in the present situation." It is worth noting that Russian economy does not run current account deficits to smooth out volatility in imports. "The current account last posted a deficit for a short period only, during the crisis of 1998."

Which means that BOFIT projects sharper decline in imports this time around: "import volumes are estimated to fall by a fifth in 2015. [On top of already sharp contraction in 2014]. The decline in imports will level off after 2015 as the economic contraction eases. In addition, the rouble’s real exchange rate will strengthen, since inflation is considerably faster in Russia than in its trading partners (the difference has grown to over 10%). In the absence of shocks which would lead to capital outflows, the rouble’s nominal exchange rate is expected to remain fairly stable, because net capital outflows stemming from e.g. repayment of foreign debt by non-financial corporations and banks will not necessarily exceed the surplus on the current account."

In other words, BOFIT does not expect an external funding crisis to be triggered by the debt redemptions.

"The current account will be bolstered by diminishing imports and a recovery in Russia’s export income resulting from rising oil prices. The recovery in export income will, in turn, create room for an increase in imports."

All of which is consistent with the Government policy: "the Russian Government has increased reactive manual steering in several areas ahead of the recession. Import controls have been intensified, e.g. by raising certain import duties and favouring domestic products in public procurement and also projects of state-owned enterprises. Capital outflows have been restricted by e.g. strengthening banking controls and issuing instructions to state-owned enterprises. Companies have been encouraged to apply targeted price controls, although this has not been widely used, as yet."

Exporters to Russia, especially from the EU, can expect some rough years ahead.