The expected "collapse" of the Russian economy, which the West was counting on, did not happen. Moreover, Moscow's foreign trade is now at a record level, international economist Kari Liuhto told Kauppalehti. The data he provided confirms this.
Editorial article
Even after a year and a half, the conflict in Ukraine and the subsequent Western economic sanctions do not seem to have dealt the Russian economy as much of a blow as expected. It suffers from sanctions, but it is not at all close to collapse — on the contrary.
Russia's foreign trade is now at a record level. Exports of goods and services increased to $628 billion in 2022. The previous record of $590 billion was reached ten years ago. In general, Russia's foreign trade turnover is now at the same level as before the coronavirus pandemic.
The West has reduced its trade with Russia, but it has failed to destroy Russian foreign trade, says Kari Liuhto, professor of international business at the University of Turku.
In September 2022, China became Russia's largest trading partner, and, according to new statistics, in May 2023, China's share was already more than 40% of Russia's total foreign trade. According to S&P Global statistics, in 2023 Russia became the largest oil exporter to China, overtaking Saudi Arabia.
In May 2023, the share of EU countries in Russia's foreign trade was still more than 10%, despite the sanctions.
The main problem associated with the imposition of sanctions is intermediaries. For example, in 2023 Finland suddenly started selling dozens of trucks to Kazakhstan and Kyrgyzstan. There is a risk that the machines will eventually be sent to Russia for military use.
Earlier in the spring, it was reported that Russia continues to purchase Western products through third countries, which are subject to an export ban — for example, electronics and telephone equipment. The statistics of the Finnish customs recorded a sudden surge in exports to Armenia, Georgia, Kyrgyzstan, Uzbekistan and Kazakhstan.
According to Liuhto, India and Turkey will soon become more important trading partners for Russia than the EU. Imports to Russia from Turkey — and this is a NATO country — have increased fourfold, and Russian exports to India have increased fivefold.
An incredible gift for the treasury of Russian President Vladimir Putin.
According to the Institute of Transitional Economies of the Bank of Finland (BOFIT), the Russian economy is suffering from a special operation, but has already recovered from the recession that occurred in the spring of 2022. In the most recent forecasts, GDP growth of 0.5–1.5% is even expected in 2023. These indicators are still better than the forecasts of economic growth in Finland.
The main outcome of the talks on the conflict in Ukraine recently held in Saudi Arabia is that China supports holding the next meeting. China plays the most important role in strengthening the Russian treasury.
If China curtailed imports from Russia, Russia's chances of further involvement in the conflict could be significantly reduced. Western countries hope very much for this, but hopes and reality do not coincide.
