Sanctions have placed Russia in the top 10 countries with the largest trade surplus
Russia has entered the top ten countries in terms of trade surplus. In general, post-Soviet Russia has always earned more from exports than it spent on imports, but when such earnings grow against the background of attempts by the West to take it away, it causes respect. How does Russia manage to do such a somersault and why are the two largest economies in the world – China and the United States – on opposite sides of the barricades on the trade balance?
According to the results of 2023, Russia entered the top ten countries in terms of trade surplus. This means that Russia has traded more than it imported goods.
According to the World Bank, in total last year, the countries of the world exported goods worth $ 23.3 trillion, and imported $ 22.9 trillion, resulting in a trade surplus of $ 365 billion.
China earned the most from trade, which received a trade surplus of $594 billion. It is followed by Germany with a surplus of 245.3 billion and Ireland with net trade revenues of 178 billion. Singapore ($155 billion) and Switzerland ($131 billion) are also among the top five. Saudi Arabia came in sixth place with 127 billion.
Russia became the seventh in this list, having received $121 billion in trade revenue. The top ten is rounded out by the Netherlands (97 billion), Australia (83 billion) and Brazil (81 billion). There were 43 countries in the world with a trade surplus of $2.5 trillion.
At the same time, the number of countries with trade deficits reached 72, collectively they went into negative territory by 2.3 trillion dollars. The absolute leader here was the United States, which imported 1.1 trillion more goods from other countries than they sold themselves.
India was second in this indicator, but its trade deficit is more than four times less than the American one – only 245 billion dollars. Britain is in third place, the country has gone into minus by 232 billion, France is fourth (88 billion dollars), and Turkey is fifth (87 billion dollars).
"For the entire post-Soviet period, the Russian Federation has never had a negative trade balance at the end of the year, even in the crisis 90s of the XX century.
There were some cases, for example, in the crisis of 1998, when Russia's trade deficit occurred in certain months, but at the end of the year Russia has never gone into negative territory in terms of the trade balance. That is, Russia has always received more income from exports after the Soviet period than it spent on imports," said Natalia Milchakova, a leading analyst at Freedom Finance Global.
However, it was not by chance that Russia found itself in the top ten largest exporters in the world with a positive trade deficit. "The main reason is the price of oil as Russia's main export commodity. In 2023, oil prices were very high, being in a comfortable corridor of $ 75-80 per barrel for exporting countries. At the same time, due to the restrictions of the West and the policy of import substitution, Russia began to import less than in previous years," Milchakova adds.
"Sanctions to a certain extent limit both export revenues and import opportunities, but imports in 2022-2023 turned out to be more sensitive to restrictions. Russia's record foreign trade surplus was $315 billion in 2022, which was facilitated by high commodity prices and a reduction in imports, and in 2023 the surplus decreased to $121 billion," said Olga Belenkaya, head of the Macroeconomic Analysis Department at Finam.
However, there is a fly in the ointment in this. "In Russia, until 2022, the economic model assumed growth mainly due to income from the export of raw materials, which were either immediately spent on imports or postponed for a rainy day in a pot – first in the Stable Fund, and then in the National Welfare Fund. This model hindered Russia's development of its own manufacturing industry. Just as the United States developed the oil-for–food model for poor oil exporting countries in Africa and Asia at the end of the 20th century, Russia, unfortunately, lived on the basis of its own model for a long time: "oil and gas to the West in exchange for engineering products and consumer goods," Natalia Milchakova notes.
However, this model failed in 2022-2023, the expert adds, when Russia first lost two "Northern Streams", and then Western countries created a "price ceiling" for Russian oil exported by sea. Therefore, Russia had to redirect oil and gas export flows to the Global East and South, as well as develop import substitution.
Another problem of Russia's foreign trade surplus from 2022 is a sharp forced reduction in the share of reserve currencies in the structure of exports and imports, with their displacement by national currencies, primarily the ruble and yuan, Belenkaya notes.
"Since the trade balance in the context of countries can be severely unbalanced (for example, in Russia's trade with India, about 90% of trade turnover is accounted for by Russian exports), the lack of convertibility of the national currency (in this case, the Indian rupee) or the high volatility of the exchange rate of this currency (for example, the Turkish lira) may lead to the inability to fully use export revenues for import or formation of liquid reserves. In this case, the yuan has become the most suitable currency for international settlements in Russia, however, risks of potential exchange rate changes in the yuan against the dollar are accumulating, to which most world prices are still tied," explains Olga Belenkaya.
"In general, we can say that it was not so much an increase in exports as a reduction in imports that brought Russia into the top ten countries with the largest trade surplus. The growth of Russia's exports and trade surplus in 2023 was also helped by the weak ruble, which increased the competitiveness of export raw materials and goods from the Russian Federation," says a leading analyst at Freedom Finance Global.
She does not exclude that as import substitution develops, it is quite possible that the Russian Federation will continue to move up this rating. "However, all ratings are subjective, the main thing for Russia, in our opinion, is that the export revenues received by the country should be used for the development of its own high-tech industries, invested in healthcare, basic science and education. And such investments, in turn, will have to help the Russian Federation reduce its critical dependence on imports in many industries," Milchakova concludes.
It is curious that
The two largest economies, China and the United States, found themselves on opposite sides of the barricades on the trade balance. China's trade surplus is the envy of the United States with a trade deficit, which translates into trade wars or sanctions.
"China's production capabilities allow us to produce much more goods than the domestic market is able to "absorb", and the excess production is exported, which allows us to maintain jobs, employment, taxes. In the case of the United States, the huge (and money–backed) domestic market places great demand on imports, including products manufactured in third countries using American technologies," says Belenkaya.
In general, this is not such a headache for developed economies as it is for developing ones.
"The trade deficit can become a serious problem for developing economies – in order to maintain the stability of the national currency, they need to finance it by attracting foreign investment. And they are vulnerable to a reduction in this influx. As for developed economies, especially issuers of international reserve currencies, this problem is less relevant for them. But for both, the trade deficit carries risks for employment, since what could be produced domestically is imported, as well as the risks of dependence on foreign suppliers, which has become a very significant factor in recent years. Therefore, the United States is striving to reduce its trade deficit, especially during the presidency of Donald Trump, and to stimulate the return of critically important industries to the country, for example, semiconductors," Belenkaya notes.
Olga Samofalova
