Russian imports finally on the rise

Measured in US dollars, the value of imported goods rose at a rate of nearly 6 % y-o-y in the third quarter. In the on-year terms, it was the first increase in imports in three years. Growth was driven by higher imports of machinery, equipment and transport vehicles, which were up 20 % y-o-y. Some of the invigorated growth reflected demand from large investment projects such as the LNG liquefaction plant and shipping terminal under construction on the Yamal peninsula. Textile imports were also up slightly, but other major goods import categories continued to decline.

Import demand has also been supported by the ruble’s appreciation this year. The ruble’s real trade-weighted exchange rate was up 5 % y-o-y in the third quarter. A Gaidar Institute report noted that the ruble’s strengthening is yet another blow to already previously weak attempts aimed at import substitution. Imports began to recapture market share of consumption in numerous categories this year. Moreover, many imported products gained market share even when the ruble was declining as there are no comparable domestic products available.

The contraction in Russian goods exports slowed further in the third quarter, but its value was still 9 % less than a year earlier, due mainly to lower oil prices. The average price of Urals-grade crude oil in July-September was $44 a barrel compared to $50 a barrel in 3Q15. The value of exports excluding oil & gas returned to modest growth. Trends in the export volumes remained spotty, however. The volume of Russia’s top export, crude oil, was up 4 % y-o-y and the long decline in exports of oil products ended.        

For the first nine months of the year, the value of Russian goods imports was $136 billion, a decline of 4 % from the same period in 2015. The value of goods exports contracted by nearly 25 % y-o-y to $200 billion. Nearly 40 % of imports came from the EU, a third from Asia and just over 10 % from CIS countries. The EU accounted for nearly half of exports, Asia roughly 20 % and CIS countries 13 %.    

Percentage change in value of Russian goods imports

Sources: Russian customs, BOFIT.