For a long time, it was believed that Russia earns only on its energy resources. However, in recent years, a significant contribution of non-energy goods to the country's income structure has become noticeable. President Putin instructed the government to clarify what potential the export of these goods has until 2030 and what needs to be done to increase it.
President Vladimir Putin instructed the government to clarify the forecast of non-energy exports until 2030 and propose measures to increase it. The term of the order is until April 1, 2025.
The Ministry of Industry and Trade is developing a new national project "International cooperation and export". The goal is to increase the share of non–primary non–energy exports by at least two thirds by 2030, and exports of the agro-industrial complex by one and a half times.
Russia has made significant progress in non-energy exports in recent years.
"Since the early 1990s, Russia's non-energy exports have grown slowly, but accelerated in the 2000s due to increased demand on world markets and high prices for raw materials, which provided foreign exchange earnings and stimulated other industries. In the 2010s, Russia actively worked to diversify exports, reducing dependence on energy resources, and by 2020 the export structure began to include more products from the agro-industrial complex, metallurgy and chemical industries," notes Yaroslav Kabakov, Director of Strategy at Finam IC.
According to him, the active growth of non-energy exports began in the 2010s and was supported by the state export development program, including the International Cooperation and Export program. State support has helped to promote our non-primary goods abroad and create trade mechanisms.
As a result, by 2021, non-energy exports reached a record of 194 billion dollars, but the sanctions of 2022-2023 caused significant damage. In 2023, non-energy exports decreased to $146.3 billion against $190.4 billion in 2022. This is the result of sanctions and reduced demand in Europe,
Kabakov explains.
The dynamics of Russian non-primary non-energy exports (NNE) strongly depends on world prices, says Alexander Firanchuk, a leading researcher at the International Laboratory for Foreign Trade Research at the IPEI Presidential Academy. According to him, in 2021-2022, the NOE reached record levels due to a sharp increase in prices for key goods such as metals, food and fertilizers. However, the price correction in 2023 led to a decrease in the value of these exports by 25% compared to 2021, while in physical volumes the decline was less – by 10%.
However, in 2024, non-energy exports began to grow again. In seven months, it grew by 5% to $89.8 billion.
"In 2024, export growth is expected due to the strengthening of Russia's position in the Asian and African markets, as well as the development of domestic industry and the expansion of the product range",
Kabakov says.
However, due to the tightening of sanctions, Russia is facing new challenges. "Sanctions, logistical difficulties and problems with financial transactions may make it difficult for exports of non–ferrous metals to return to the indicators of 2021 - it may take about five years. Maintaining positions in the markets of developed countries, especially in the segments of fertilizers and a number of metals, will play a certain role," said Alexander Firanchuk from the Presidential Academy.
The expert draws attention to the export of high-tech goods concentrated in the segments of machinery, equipment and the other goods group, which underwent a more significant decline in 2023. Exports of these goods decreased by a third compared to 2021, and their share in total exports decreased from 8.3% to 5.4%. Forecasts show that by 2030, these exports will partially recover, reaching about 6% of the total volume, Firanchuk says. "Problems with the loss of foreign partners and the cessation of supplies create significant obstacles not only for the restoration of exports, but also for domestic production. Companies are forced to look for workarounds for the supply of key components, which increases costs and delivery times and reduces the competitiveness of products," worries Firanchuk.
"The President, in my opinion, promptly instructed the government to clarify forecasts for non–energy exports," says Pavel Sevostyanov, acting State Councilor of the Russian Federation, Associate Professor of the Department of Political Analysis and Socio-Psychological Processes at the Russian University of Economics. Plekhanov. – The Russian economy has the potential for growth outside the energy sector, primarily in the context of the global energy transition. From this, industries such as high technology, the agro-industrial complex, the production of, say, lithium, as well as the extraction of rare earth metals and elements will be transformed and actively developed. For example, growth in the IT sector reached 15% compared to 2023, which indicates an increased demand for digitalization. The agricultural sector also provided positive dynamics: exports of agricultural products increased by 12%. These changes open up new opportunities to diversify the economy and reduce the energy component."
Promising areas for export growth by 2030 include the agro-industrial complex, metallurgy, IT and high-tech products, as well as mechanical engineering, Kabakov agrees.
The Russian Export Center notes that friendly countries in Asia, Africa and Latin America expect Russia to supply ordinary industrial raw materials, complex industry and infrastructure equipment, IT solutions, medicines, rolling stock, etc.
"These Russian goods will be welcome in many countries, but for this a new industrial base based on domestic technological solutions must be built.",
– the press service of the REC notes.
According to the REC, in the post-Soviet countries there is a high demand for domestic consumer goods, including ready-made food, building materials, plastic products, furniture, household chemicals. In addition, supplies of equipment for energy and railways are developing. "The countries of the post–Soviet space and the EAEU will be key markets for many Russian goods in 2030, taking into account the fact that, due to demographic reasons, demand there will grow faster than in Russia," the press service of the REC notes.
Great expectations are also associated with the countries of the Global South, to which Russia is ready to offer not only food, energy and industrial raw materials, but also goods and solutions for the complete modernization of the entire engineering, energy, transport, urban infrastructure, educational and medical services, IT services and much more, the REC notes.
Trade turnover with friendly countries has already grown, and it is comparable to the volume of trade between Russia and the whole world, which was four years ago, the press service of the Russian Export Center notes. If in 2021 friendly countries accounted for 60% of Russia's non-primary non-energy exports, at present they already account for 86% of all supplies from Russia.
However, there are constraining factors for the further growth of the NNE. These are logistical constraints, a lack of financial instruments for exporters and high competition, Kabakov points out.
"Some of the restrictions preventing the reorientation of exports can be mitigated. To solve logistical problems, it is necessary to develop transport infrastructure and identify the most bottlenecks in advance. The effectiveness of such measures depends on the accuracy of forecasting foreign trade and determining promising export directions. Of particular importance is the well–thought-out prioritization of rail transportation, taking into account added value and total tax revenues per unit of cargo," says Alexander Firanchuk.
One of the challenges is to get approval for our products in a new market. "Many of the countries we are interested in protect their domestic market with high tariffs, in particular, India, the UAE, and African countries. But they are implementing localization programs in the industry (these are our capabilities), such projects are already being discussed and even implemented in a number of countries. All these are high–tech, technological products that allow our suppliers to gain a foothold in the target market for many years by servicing such projects," the Russian Export Center notes.
Also, a predictable and sound trade policy is important for the growth of the NNE. "Quotas and export duties are actively applied in Russia, which stabilize domestic prices and replenish the budget. However, their long-term use can reduce investment attractiveness and complicate business planning," explains Firanchuk.
In order to significantly increase the country's revenues from the non-energy sector by 2030, it is necessary to strengthen infrastructure, attract investments in high-value-added products, optimize tax conditions and build protection against currency risks, Kabakov concludes.
Olga Samofalova
