BOFIT Weekly Review 2015/36
Finnish exports to Russia down sharply in the first half, exports to other countries unchanged
Finnish goods exports to Russia amounted to €1.5 billion in the first half, down by a third from a year earlier. Much of the weak export trend was driven by the contraction in Russian demand and the weak ruble. In the first half, the euro-value of total goods imports to Russia contracted 24 % y-o-y, and the ruble was down 13 % in real terms against the euro. Exports to Russia also suffer from the general competitiveness problems of Finnish exports, but Finland’s goods exports to other countries contracted only 0.1 % y-o-y. Russia was Finland’s fifth largest export market with a share of less than 6 % of total exports.
Finnish exports to Russia contracted in all major product categories. The biggest contributions for the export contraction were due to machinery and equipment since it is the largest export product category, as well as food exports, which experienced the sharpest drop. Machinery exports recovered a bit in June, up 1 % y-o-y, but month-to-month fluctuations are large. Food exports have had to struggle with the additional burden of Russia’s import bans. Food exports to Russia contracted in January-June by over 70 % y-o-y, drawing down Finnish food exports overall (even if food exports to other markets were mostly up). Finnish food exporters seem to have been unable to find other markets for e.g. fish and certain dairy products whereas exports of butter to other markets soared.
The value of transit goods from third countries via Finland to Russia dwindled in January-June to less than €4 billion. Transit shipments this year have fallen below levels seen in the early 2000s.
Export of travel services to Russia appears to have also declined further. Border-crossings between Finland and Russia fell by over a fifth in the first half, and the number of Russian travellers arriving to Finnish inns and hotels was down by nearly 50 % y-o-y.
Finnish goods imports from Russia in the first half shrank 36 % y-o-y to €3 billion. The drop in the value of imports was largely from low oil prices. Russia fell to Finland’s third largest import supplier providing 11 % of Finnish goods imports.
Russia’s goods imports and Finnish exports to Russia (EUR)
Sources: Central Bank of Russia, Finnish Customs.