BOFIT Weekly Review 2016/09
Finland’s trade with Russia declined sharply last year
The contraction reflects mainly lower oil prices, weak Russian demand and the ruble’s devaluation. EU-imposed sanctions on trade with Russia have apparently had only modest impact on trade. The food import bans imposed by Russia reduced Finnish food exports. The value of goods exports was €3.2 billion and goods imports €6 billion. Exports and imports shrank by nearly a third to levels well below the troughs of the 2009 recession. Russia accounted for 6 % of Finnish goods exports and 11 % of imports.
The structure of exports has scarcely changed in recent years. Some 34 % of exports last year consisted of machinery and equipment, 26 % of chemical products and 14 % of wood and paper products. Foodstuffs fell slightly to 4 %. In 2009, the share of machinery, equipment and transport vehicles contracted sharply, largely on the collapse of re-exports of mobile phones and passenger cars, which have not recovered much since. Finnish customs says re-exports (i.e. exports of goods manufactured in a third country) accounted for 22 % of Finland’s exports to Russia in 2014. Re-exports currently include e.g. some machinery and pharmaceuticals.
The structure of imports has also showed little change. Last year mineral fuels (mainly crude oil) still accounted for over 70 % of imports, so the fall in imports was largely due to lower oil prices. Chemical products were 13 % of imports, wood products 6 % and metal products 3 %.
Russian tourism in Finland also declined sharply last year. Slightly over 9 million people crossed Finland’s eastern border, a decline of about 20 % from 2014. Tax-free sales fell roughly the same measured by the number of purchases. Overnight stays of Russian travellers declined by over 40 %. Nevertheless, Russians were still the single largest foreign tourist group visiting Finland last year.
Transit transport from Finland to Russia contracted about 40 % last year. It was the fourth consecutive year of contraction and the value of transit freight was just €8 billion (down from €30 billion in peak years).