Навигация
3. Foreign Trade Pattern
In 1995 Russian foreign trade was influenced by differently directed factors. A favorable state of the world market and the governmental policy of stimulating exports via regular lowering of export duties provided for a further increase in volumes of trade with countries outside the former Soviet Union and a stable active balance of the foreign trade.
Estimating Russian foreign trade the following adverse factors shall be taken into account: a decline in production, small amounts of investment, rather high inflation rates, insufficient level of state assistance for development of the country's export potential, poor competitiveness of many Russian-made manufactured products, especially of machines and equipment, lack of positive shifts in development of Russia's external relations with countries of the former CMEA, huge external debt, discriminatory barriers banning a number of Russian-made products from external markets. In connection with accession of Finland, Sweden and Austria to the EU Russia automatically became subject to anti-dumping and quantitative restrictions concerning trade with these countries in steel, textiles, mineral fertilizers, uranium.
Introduction of the "ruble corridor (fluctuation band)" alongside with a relatively high internal price dynamics caused deterioration of export transactions' effectiveness. However, due to liberalization of energy resources exports, the export sector reacted to the introduction of the "corridor" slower and not so sharply as critics of a fixed exchange rate had believed. At the same time, stabilization of ruble exchange rate created a sufficiently favorable transaction climate for importers allowing them to compensate a part of the loss inflicted by an increase in import tariffs.
Goskomstat reports that the Russian foreign trade turnover, unorganized trade including, made $ 135.7 billion in 1995, or by 16 percent more in comparison with 1994 figures. Exports were at $ 77.8 billion (a 18 percent increase) and imports at $ 57.9 billion (by 15 percent more).
The results of external economic activities in 1992 through 1995 are indicative of the fact that Russia re-oriented its trade towards industrialized countries and that the share of countries outside the former Soviet Union in the total foreign trade turnover has grown. In 1995 countries outside the former USSR accounted for 78 percent of it. In 1992 through 1995 exports to these countries increased at a record rate in the last 20 years with exports showing a 25 percent growth ($ 64.3 billion) and imports (together with unorganized trade) increasing by 12 percent ($ 41.6 billion).
In 1995 growth rates slowed down considerably. Thus, while in the first quarter exports grew by 45 percent as compared with the same period in the last year, in the second quarter it made only 29 percent and showed a modest 15 percent increase in the third quarter. Undoubtedly, export growth rates were affected by the "currency corridor (fluctuation band)" introduced in the second half of the year.
As before, the bulk of Russian exports consists of raw materials. Fuel and energy resources account for the biggest share (41 percent) of exports, while the Fuel-and-Energy Complex production (oil, natural gas, oil products) becomes more and more oriented towards external markets.
In 1995 a decline in export growth rates in real terms was observed as natural gas exports increased by 11 percent (14 percent in 1994), oil products grew by 8 percent (11 percent), oil--by only 1 percent (11 percent).
Growth of exports as calculated in value terms was primarily caused by a favorable situation on the world market. Average contract oil prices of exports in the countries outside the former Soviet Union increased by about 7 percent as compared with 1994 figures, natural gas exports grew by 10 percent while oil products showed a 6.6 percent increase.
Metal exports accounted for a 20 percent share in the Russian exports. Nickel and ferrous metals exports grew most rapidly at 37 and 26 percent accordingly. Average export prices of key metals surged, thus, price of nickel increased by 33.1 percent, of aluminum--by 36.9 percent, of copper--by 24.2 percent, of ferrous alloys--by 24.7 percent, of pig iron--by 14.6 percent. The pattern of metal exports has somewhat changed. Customs statistics reveal a growing number of contracts on export of finished metal articles, however, their share in the total export volumes is still insignificant. These articles are being made according to designs of foreign companies (mostly in aircraft and engineering industries) under a binding condition that they shall be manufactured in accordance with the West European standards and certified by a foreign firm. It is too early to suggest the end of an age of raw exports conducted in their most primitive form, however, the Russian metal industry is given an opportunity to participate in the international division of labor on equal basis and to reach a qualitatively new level of production.
The share of chemicals made 9.6 percent. Mineral fertilizers still remain a key export item in the industry. Export volumes of mineral fertilizers increased by 14 percent in comparison with 1994 figures. Simultaneously, average contract prices also grew (by 24 percent).
Export patterns within the forestry and paper industry tended to be oriented towards raw materials in recent years affecting the structure of currency proceeds accordingly. A third of foreign exchange proceeds was derived from raw timber (logs) exports while semi-finished timber (lumber) accounted for 25 percent of proceeds and processing-intensive products brought only 32 percent.
A considerable increase in physical volumes of exports in the countries outside the former Soviet Union as compared with the previous year figures was reported for logs (37 percent) and cellulose (38 percent). At the same time, average export prices of logs grew by 2.8 percent and of cellulose -- by 96.6 percent.
One of the ways to increase export revenues is an expansion of sales markets for Russian-made weapons and military equipment. Export volumes of military production made $ 2.6 billion in 1995, that being by 1.7 times more than in 1994.
The share of machines and equipment in Russian exports to countries outside the former Soviet Union contracted to 3.8 percent as compared with 5.3 percent in 1994. Development of new competitive and technologically-intensive products relevant to modern level of requirements on external markets demands large investment and is time-consuming.
An increase in internal productional costs, first of all at the expense of energy and raw materials, more expensive loans, growing transport expenses, aging production assets in extractive and processing branches, deteriorating productional situation contributed to diminishing effectiveness of export transactions. At present only export of natural gas, oil, nickel, timber and lumber are profitable. Export of oil products, ferrous and nonferrous metals, chemicals begins to bring losses. However, due to worsening financial situation of Russian enterprises and growing payment arrears exporters prefer to have hard currencies even at declining or altogether negative profitability of exports.
The most dynamic and growing market of the Russian Federation are industrialized Western countries. The largest share of Russian exports goes to Germany (9.1 percent). The USA account for 6.9 percent, Switzerland--for 5.8 percent, Italy--for 5.6 percent, Japan--for 5.5 percent, Netherlands -- for 4.9 percent, Great Britain -- for 4.7 percent and Finland--for 4 percent of Russian exports.
The pattern of Russian imports has not been changed considerably. As before, machines and equipment were ranked first and accounted for a 38 percent share of the total imports which grew by 23 percent in comparison with 1994. It was caused by a necessity to provide key branches of the national economy with modern technologies and equipment.
A decline in agriculture followed by deteriorating provision of the populace with domestic-made foodstuffs has led to an expansion of food imports. Such measures as a rise of import duty rates, introduction of excises and of value added tax, abolition of preferences concerning import tariffs, which have been taken lately, contributed to an increase in internal prices of imported goods thus creating prerequisites to restrain imports. However, stabilization of ruble somewhat compensated for the negative impact of growing import duties and excises and helped to increase imports.
In 1995 imports grew considerably, especially of such products as sunflower oil (a 232 percent increase), poultry (by 70 percent more), alcoholic and non-alcoholic beverages (a 67 percent increase), butter (an increase by 65 percent), frozen meat (by 43 percent more).
In the nearest future dynamics and pattern of the country's foreign trade will be first of all determined by the internal economic situation, i.e. whether it shows signs of business revival or not, by changes in the structure of supply and solvent demand on the domestic market, as well as by exchange rate policies. The regulatory mechanism of the external economic activities may also change due to political factors.
In 1996 exports grew somewhat slower (at about 1--3 percent rates). It was expected that export of major fuel and energy resources would remain at the same level while such products as metals, chemicals, timber, pulp and paper would be exported in increasing quantities.
Oil and natural gas exports remained profitable because estimated rates of internal price growth prevailed.
Imports pattern changed impacted by a growth of the share of technological equipment and manufactured consumer goods. Growing imports of key foodstuffs and non-food consumer goods led to application of certain measures aimed to tighten protectionist regime in order to safeguard domestic industries in 1996 (import quotas introduced).
In 1995 Russian foreign trade turnover with the CIS countries made $ 29.8 billion, increasing by 5 percent in comparison with 1994 figures, it is due, first of all, to a price rise concerning fuel and energy products (14 -- 28 percent on the average). Exports made $ 13.5 billion, or by 9 percent less than in 1994 while imports reached $ 16.3 billion (a 21 percent increase). The share of the CIS countries in the Russian foreign trade turnover diminished by 2 percent as compared with the previous year figures and made 22 percent.
For the first time in the years of the CIS existence Russia had a negative trade balance with these countries ($ -2.8 billion) while in 1994 it had a trade surplus of $ 1.2 billion. Starting from the end of the last year imports from the CIS grew at a fast rate while exports gradually shrank.
The main reason determining the import surplus is an unbalanced, owning to a crisis situation existing in national economies, foreign trade within the CIS framework, that rendering difficulties in settlement of the CIS countries debts, especially those due for fuel and energy resources supply. According to current data, these debts as of January 1, 1996, made Rb 15.6 trillion, or two times more than in 1995. It is hardly justified to attribute Russian shrinking exports to neighboring countries to introduction of the "currency corridor (fluctuation band)" as their fall began as early as April while to the contrary in October some increase in export operations was observed. On the other hand, introduction of the "currency corridor (fluctuation band)" and stabilization of ruble exchange rates enhanced effectiveness of operations of exporters from countries within the former Soviet Union on the Russian market.
As before, the fuel and energy products accounted for the bulk of exports to the CIS member countries (about 50 percent). Total volumes of oil exports diminished by 22 percent as compared with the previous year while export of oil products shrank even more considerably -- by 60 percent, the fact caused not only by payment arrears in reciprocal transactions, but by growing export prices of Russian oil which increased by 28.3 percent in comparison with the last year figures and reached $ 74.9 per metric ton (that making roughly 70 percent of prices under export contracts with countries outside the former Soviet Union). However, now some CIS countries try to reduce their dependence on Russian energy supply. For instance, Moldavia has already signed an oil import agreement with Iran while Ukraine relies upon cooperation with countries of the Persian Gulf. At the same time, Russian oil exports to Byelorussia grew considerably as a result of creation of the common customs area, that allowing Byelorussian oil processing enterprises to purchase oil at prices quoted on the Russian domestic market.
The pattern of Russian exports somewhat changed in 1995 as compared with 1994, for instance coal exports grew by 32 percent, iron ore exports increased twofold and export of ferrous metals also showed signs of growth.
As concerns import operations, the role of the CIS member countries remains an important one in terms of providing Russia with foodstuffs. Thus, the share of white sugar imports from these countries reached 80 percent while their volumes increased by more than two times since the last year. There was also observed an increase in imports of grain, meat, butter. At the same time, a trend to purchase fewer consumer goods in countries within the former Soviet Union in connection to availability of cheaper similar products of quality made in the West manifests itself.
The Customs Union of Russia, Byelorussia and Kazakhstan which was established in 1995 and faces a number of objective difficulties and contradictions caused in the first turn by differences in levels of development and directions of reforms. The Intergovernmental Economic Committee which at last started to perform its functions in 1995 still lacks supranational authority; unsettled problems of mutual payment arrears prevent activities of the Payment Union.
Prospects of foreign trade developments within the CIS cannot be estimated in simple terms. The Commonwealth's objective orientation towards integration faces grave political and economic problems. It is probable that in the beginning of next year a negative trade balance with neighboring countries will remain, in particular due to further decline in export of fuel and energy products.
On the whole, the Commonwealth's future, undoubtedly, will depend on the political situation in Russia. However, the experience of the last few years demonstrates that Russia's partners within the CIS prefer to act according to their economic interests rather than to political rhetorics. The CIS member countries are interested in an economic cooperation with Russia exactly because it has progressed relatively further on the way of reforms. That is why slackening pace of the reform or a complete stop of the transformation may damage trends towards integration to such extent that any political declarations on closer unity and cooperation will be overweighed.
Balance of Payments
The balance of payments reflecting Russian residents' activities in the external sector reveals the following key facts.
In 1995, the strengthening ruble did not hold back the growth of trade surplus: exports increased at a greater rate than imports.
As during previous periods import of services exceeded their exports, that being primarily attributed to developing tourism to countries outside the former Soviet Union. Thus, import of tourist services exceeded imports by $ 5366 million. As a result, current accounts balance was by 43 percent less than the balance of foreign trade. Operations of governmental agencies prevailed in the capital account. External debt grew due both to new borrowing and deferments and arrears in debt servicing.
Non-state sector operations were mostly represented by commercial loans, both in terms of merchandise exports with deferred payments and advance payments. As concerns direct and portfolio investment, they remained at an insignificant level.
Growing reliance of residents on ruble was shown by somewhat decreasing amounts of cash foreign exchange.
As a rule, commercial structures accounted for loans granted to non-residents. The main form of such loans was export loans of enterprises.
Non-repatriation of export proceeds became an important factor destabilizing the financial sphere. In January through September of 1995 it reached $ 5.6 billion, as the State Customs Committee (GTK) reports. This figure is comparable to all foreign loans drawn by the state in the same period.
The amount of payments due to disburse the official external debt exerted more pressure on the Federal budget as compared with the same period of the last year. While in 9 months of 1994 96 percent of actual payments to disburse the official external debt were financed at the expense of external sources and only $ 134 million were received from internal sources, in 9 months of 1995 the figures made 89.5 percent and $ 590 million accordingly.
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