ROSSIYSKAYA FEDERATSIYA

Interesting Facts
About Russia.mp4

INTRODUCTION
Rossiyskaya Federatsiya (Russian Federation), or Rossia (Russia) was once the preeminent republic of the Union
of Soviet Socialist Republics (U.S.S.R.; commonly known as the Soviet Union) and became an independent country after
the dissolution of the Soviet Union in December 1991.
Russia is by far the world’s largest country extending across the whole of northern Asia and the eastern third of
Europe. It contains Europe’s longest river, the Volga, and its largest lake, Ladoga. Russia also is home to the world’s
deepest lake, Baikal, and the country recorded the world’s lowest temperature outside the North and South poles that
have several times famously saved the country from foreign invaders.

The Modern
Economy of Russia.mp4

ECONOMY
The Russian republic, by virtue of its great size and abundant natural resources, played a leading role in the
economy of the Soviet Union. In the years before the dissolution of the Soviet Union, however, the economy of Russia
and of the entire country was in a state of decline, and official statistics masked industrial inefficiencies.
The monetary system was in disarray: the removal of price controls caused a huge escalation in inflation and prices; the
value of the ruble, the country’s currency, plummeted; and real incomes fell dramatically.
Nevertheless, after experiencing great difficulties, in 1999 Russian economy began to recover and the country
entered the period of steady rise in economy. The GDP growth caused the increasing confidence among entrepreneurs
and consumers. Foreign investments inflow increased while the capital outflow practically stopped. By the end of 2006 the
GDP growth amounted to 6.8% as opposed to 6.4% in the previous year. Russia's GDP approached those of Great
Britain, Italy and France. Growing export volume, the increase in labor productivity and effective use capital use smoothed
the negative effects of previous years. Russia’s effective use of its natural resources have played a big role in bringing the
country to where it is now. Natural resources potential of Russia is over 20% of the world’s reserves. This fact places
Russia on a special place among industrialized countries. Natural resources used by the economy of Russia account for
95.7% of national wealth. There are large deposits of fuel and energy resources: oil, natural gas, coal, and uranium ore. 

Income Level Level of

High Income In Transition
(by per capita GNI) Development
Economic Trivia Russia has been the world’s leading producer since 2011.

Top 3 Trade Partners (2019): China, Netherlands, Germany

Trade
Top 3 Export Partners (2019): China, Germany, Belarus

Complete Range of Mining and Extractive Industries Producing Coal, Oil,

Top Industries
Gas, Chemicals

TRADE
 Inside Russian
Economy Documentary.mp4

International trade — especially the size and evolution of imports and exports — is an important indicator of a
country’s economic performance, showing its status on the international stage
The external trade of Russia, the world's fourteenth largest exporter, was interrelated with the country's foreign
policy over the past decade. In recent years, the geographical orientation of Russian foreign trade shifted
from Europe to Asia Pacific, which was reflected in merchandise trade volumes of Russia with both regions. However,
European states continued to rely on Russian mineral resources, as the country accounted for over 40 percent of  natural
gas and 27 percent of petroleum oil imported into EU-28.
Russia ranked as the second largest crude oil exporting region after the Middle East. With mineral products making
up nearly 65 percent of its total exports, the national economy became heavily dependent on  energy commodities. Thus,
other manufacturing sectors received lower investment and development opportunities, which made them less attractive
to be sold abroad. Besides chemicals and natural resources, Russia was the leading exporter of wheat.
China was Russia's major trade partner, accounting for nearly 16 percent of the country's total merchandise trade
volume. The Netherlands and Germany were Russia's leading export destinations in Europe, while the United States was
the country's third largest import origin. Russia maintained strong relations with the Commonwealth of Independent
States (CIS), particularly with Armenia, Belarus, Kazakhstan, and Kyrgyzstan within the framework of the Eurasian
Economic Union (EAEU), which established a single market and the Eurasian Customs Union. Furthermore, Russia
strengthened trade cooperation with countries in Africa while hosting the Russia-Africa Summit in October 2019.
 As a consequence of Western sanctions imposed on Russia in response to the annexation of Crimea and the
territorial integrity of Ukraine, the country's foreign trade volume saw a considerable decline between 2014 and 2015.
Economic restrictions and the subsequent financial instability forced nearly two thousand German companies to leave the
Russian market since 2013. The Russian food embargo from European countries and the United States was followed by
an extensive import substitution program supporting domestic agricultural producers; however, it also contributed to an
increase in food prices.
Despite having the third highest trade surplus worldwide, Russia's foreign trade had limited growth prospects due
to low export diversification, global trade volume slowdown, and restrictions imposed by international sanctions. By 2024,
Russian external trade volume was forecast to increase to 860 billion U.S. dollars, while the oil export volume was
projected to gradually decline.

Merchandise export and import value and trade balance in Russia from 2012 to 2019
(in billion U.S. dollars)

In 2019, Russia exported goods worth nearly 423 billion U.S. dollars and imported goods worth approximately 244
billion U.S. dollars. The export and import values of the country sharply decreased between 2014 and 2015, while the
trade balance was the lowest at over 103 billion U.S. dollars in 2016.
 Ask an Expert,
Understanding Russia's Import-Export Market.mp4

I. IMPORT
a. Top 10 Products
As per Russia import data, the country purchased goods worth USD 243.7 billion in 2019, up by 2.4%
as compared to the previous year. Globally, Russia’s imports ranked 21 in last year. Officially the Russian
Federation, Russia is a trans-continental country located in Eastern Europe and Northern Asia.
Based on estimated Russia’s population of 146.7 million people, the total value of imports in 2019
translates to roughly USD 1,700 in yearly product demand from every individual in this vast Eurasian
country.
Major imports of Russia are Machinery (17.74%), Electronics (12.21%), Vehicles (9.74%), Pharma
(5.77%), Plastics (4.03%), Optical, Photographic, Medical Equipment (2.99%), Articles of Iron & Steel
(2.66%), Edible Fruits & Nuts (2.09%), Iron & Steel (2.06%) and Organic Chemicals (1.82%).
According to Russia customs data, ten-largest import products roughly accounted for 61.1% of the
overall value of purchases made from other countries in 2019.Pharma (32.9%) and articles of iron & steel
(11.8%) were the largest gainers in last year. And iron & steel (-4.9%) and machinery (-0.8%) were the
biggest decliners.
b. Top Import Partners
Main import partners of Russia are China (USD 54.1 billion), Germany (USD 25.1 billion), United
States (13.4 billion), Belarus (USD 12.8 billion) and Italy (USD 10.9 billion). As per Russia import statistics
and data, these countries together accounted for 47.8% of the overall value of Russia imports.
From a continental perspective, 45.8% of Russia’s imports by value in 2019 were imported from
European countries. Asian suppliers exported 43.4% worth of goods to Russia, while 6.4% worth of
shipments were originated from North American nations. Another smaller percentage recorded from Latin
America, Africa and other regions.
II. EXPORT
a. Top 10 Products
Russia’s economy ranks as the fifth-largest in Europe, the eleventh-largest in the world by nominal
GDP and the sixth-largest by PPP.
 The latest Russia export data shows that the country shipped goods worth USD 422.7 billion in 2019,
a drop of about -5.9% from the previous year. Given the estimated Russia’s population of 146.7 million
people, that value translates to roughly USD 2,900 for every resident in this vast Eurasian country. Russia’s
exports ranked 14 in the world last year. Access Russia export statistics to have a bigger picture of country’s
every trade activity.
Top 10 export commodities of Russia are Mineral Fuels & Oils (52.24%), Iron & Steel (4.29%), Pearls
& Precious Stones (3.61%), Machinery (2.13%), Wood & Articles (2.04%), Fertilizers (1.99%), Cereals
(1.87%), Aluminum & Articles (1.38%), Electronics (1.31%) and Copper & Articles (1.24%).
According to Russia trade data, these ten-largest export commodities accounted for 72.1% of the
overall value of shipments departed from the country in 2019. The big gainers among top 10 export
categories were pearls & precious stones (51.1%) and machinery (13.2%). And leading decliner was cereals
(-24.3%).
b. Top Export Partners
Major export partners of Russia are China (USD 56.7 billion), Netherlands (USD 44.7 billion),
Germany (USD 28.0 billion), Turkey (USD 21.0 billion) and Belarus (USD 20.5 billion).
As per Russia shipment data, these top-five countries accounted for 40.5% to the total value of
exports recorded in 2019. Continental-wise, 53.5% of Russia’s exports by value were delivered to the
European countries, while 38.2% worth of products were shipped to Asian importers. Another 3.7% of total
shipments were departed to the North American countries. Smaller percentages went to countries in other
continents.
CoViD-19 IMPACT
 The Impact of
Covid-19 in Russia and Eastern Europe.mp4

From the Russia Economic Report #43 last July 5 in the current year, data provided that Activity in the Euro Area –
Russia's largest trading partner – also contracted. The Euro Area GDP contracted at an annualized rate of 13.6 percent in
Q1 2020 — the steepest fall in the bloc's existence — with several economies registering record declines. Retail sales
and industrial production in the Euro Area both experienced their largest contraction on record in March. The weak
momentum in sales and production will contribute to what is expected to be an unprecedented collapse in output during
the second quarter, possibly falling by nearly 50 percent (q/q, saar), according to the European Central Bank.
China, Russia's second-largest trading partner, has embarked on a fragile recovery after a major economic
contraction. Its GDP fell by 6.8 percent in Q1 2020, the first negative growth reading since quarterly records began in
1992. However, incoming data suggest that the output decline softened somewhat in March, as falls in industrial
production, nominal retail sales, and imports and exports bottomed out. Available daily activity data in April pointed to a
continued gradual normalization of economic activity. The recovery remains fragile, however, as air traffic and tourism, for
example, remain well below levels observed prior to COVID-19.
According to the estimates of the Ministry of Economic Development, GDP contracted by 12. 1 percent, y/y, in April
and 10.9 percent, y/y, in May. High-frequency statistics in April and May pointed to negative growth in most sectors.
Manufacturing contracted by 10 percent, y/y, in April and 7.2 percent, y/y, in May with severe negative impacts in metals
production and transport vehicles. Mineral-resource extraction decreased by 3.2 percent, y/y, before OPEC+ production
cuts that started in May and by 13.5 percent, y/y, in May. As a result, industrial production shrank. The transportation
sector was hit by falling trade volumes since the beginning of the year, contracting by 6 percent, y/y, in April 2020 and 9.5
percent, y/y, in May. PMI indexes reached record lows in April, compared to other countries and historically, recovering
somewhat in May.

In April - May, industrial production growth turned In April, Russia's PMI indexes reached record
negative in Russia lows

The impact of COVID-19 on economic activities in Russia was limited in Q1 2020 and mostly channeled through a
sharp reduction in trade and commodity prices. With the introduction of lockdown measures at the end of March, Russia
slipped into recession hit by domestic supply and demand shocks against a backdrop of already weak external demand.
In April, contraction in the output of five basic sectors2 totaled 9.9 percent, y/y, which is on par with the contraction of this
indicator in 2009, during the global financial crisis. Containment measures, including strict mobility restrictions, were
introduced only in the last week of March. As a result, the economy posted relatively robust GDP growth of 1.6 percent in
the first quarter of 2020. A low base effect from the first quarter of 2019 also supported this robust reading.
The limited impact of COVID-19 on economic activity in January-March 2020 was mostly channeled
through a sharp reduction in trade and commodity prices. This largely reflected the negative impact from the
downturn in China on global demand and growing uncertainty about the prospects of global economic growth as the crisis
escalated in Europe and in the US. The disruptions of global value chains had a limited impact on Russia, given its
relatively low level of exposure.

Export volumes for many commodities exported by Russia dropped in

the first quarter of 2020 compared to the first quarter of 2019
 According to Russia Briefing on The Social and Economic Impact of CoViD-19 On Russia and Recovery Potential:
Russia’s Federal government has proposed the following measures to support the economy:
 Deferred payments of budget loans, as well as compensation for losses of regional budgets;
 Deferral of tax collection for enterprises of the most affected sectors of the economy.
 A moratorium on business audits, including tax audits, with the exception of issues that pose risks to the life
and health of citizens;
 Expansion of the soft loan program;
 Increase in the amount of subsidies for small and medium enterprises;
 Launching a service to help employees and employers on-line inspection;
 Facilitation of lending conditions for industries affected by coronavirus;
 Lower property taxes for lessors in exchange for lower rental rates or deferred payments for tenants of
certain business categories;
 Green Corridor for the import of certain categories of goods at customs.
 On the regional level, each head of region of the Federation was authorized to form preventative norms for
the spread of coronavirus in consistence with the specific situation in each region.
The regions are facing the threat of ‘highest budget deficits’ in two decades due to a loss of revenue owing
to the economic slowdown and the crash in energy prices. It has been argued that support from the central
government will not be enough to plug the gap. Efforts at the  regional level to contain the economic damage and
open businesses have been made difficult due to rise in number of COVID-19 cases.
Given the role energy exports play in Russian economy, the low demand and price crash is a worry for the
Russian government. Apart from dealing with the consequences of a national-level slowdown, Russia will have to
formulate its recovery plans amid a worldwide recession and a crash in commodity prices due to reduced
demand, leading to a loss of revenues from oil and gas exports. Given the role energy exports play in Russian
economy, the low demand and price crash is a worry for the Russian government.
According to bank economists, in a positive scenario, the global economy will quickly recover, and Russia’s GDP
will grow by 1.5% in 2020, while the Ruble will rebound to 75 against the US dollar by the year end. However, this basic
scenario assumes that Russia’s GDP will fall by 0.8%, and the dollar will be 79 rubles. In the basic scenario, the bank
assumes that the quarantine will last 2 months, after which the slow recovery of the world economy will begin (based on
Renaissance Capital’s economic analysis).
The bank’s negative scenario suggests a 2.5% decline in the Russian economy and an increase in the exchange
rate to 82 rubles per dollar. The underlying forecasts of other analysts are generally similar. Standard & Poor’s predicts
economic decline of 0.8% in 2020. The economic downturn will lead to an increase in bad loans from 8% at the end of
2019 to 15% at the end of 2020. The accumulated capital, state assistance and weakening regulatory requirements will
allow banks and other organizations to withstand stress (based on S&P analysis).
According to Alexei Kudrin, Chairman of the Accounts Chamber, even in a fairly moderate version, the fall in GDP
this year could be from three to five percent. “But the situation may be similar, as it was in 2009, when GDP fell by almost
8%,” he said at a meeting with President Putin on April 1.
If the global economic recovery begins in the third quarter of 2020 and is accompanied by an increase in the price
of oil and other Russian export goods, then most likely the economic growth this year will be slightly higher than zero. This
appears more likely as a truce has now been agreed between Russia and Saudi Arabia to fix the price of oil.
However should the negative effect of the spread of coronavirus turns out to be deeper, and foreign government
support programs are not effective enough, then the National Wealth Fund will require significant additional funding, but
even with this a decline will be at least 3%.
CONCLUSION

Russian analysts have long expressed concern about the slow pace of social and economic development in
the country, in sharp contrast to the active decision-making when it comes to foreign policy decisions. As
personal incomes of people decline and structural problems being faced by the economy remain unaddressed, it
has impeded the development of wide-ranging bilateral relationships with Russia’s partners, who are eager to
strike deals with economically stronger countries that can help in realization of domestic developmental goals. In
other words, as Sergei Karaganov has noted, ‘Russia has a small market to attract allies and few  opportunities to
“buy” them.’
As emerging powers continue to gain in strength, Russia will have to deal with the presence of
economically strong powers in areas where it is seeking to expand its influence – most prominently, Eurasia. This
disparity between ‘Russia’s ambitions and capabilities’ remains a major cause of concern, primarily in the
economic domain. At the centre of its Greater Eurasian vision is an economic body — the Eurasian Economic
Union — one to which Russia contributes 90 percent of the GDP. A poor economic performance from the leading
economy in the Union will have a direct impact on its overall fortunes. Already, China has become an important
player in Eurasia and if it is able to further expand its presence in the region as West grapples with a growing
coronavirus crisis within its boundaries, Russia will have to evaluate the overall impact on its position on the
ground.
In addition, a further deepening of dependence on China economically as Moscow deals with the slowdown
will pose uncomfortable questions about the position Russia will take in case of a rise in US-China rivalry. This is
because as has been noted, any risk of ‘geopolitical mishaps’ exposing ‘economic weakness’ runs high.
A need to diversify relations with other regional powers to cope with the weaker economic position has been
suggested as a way to keep the Russia-China relationship on an even keel, besides having the obvious
advantage of strengthening the Russian position in Eurasia. With this objective, Moscow has in recent times
sought to galvanise its ties with other players including India, ASEAN, Japan and South Korea. The impact of the
recession on Russia at this particular moment in geopolitical history will impact its foreign policy trajectory in very
specific ways. In order to establish itself as a key player in Eurasia, Moscow will need to build its domestic
economic strength — a prospect that requires deep seated reforms that will affect the established elite power
structures existing within the political and economic system of Russia. Whether the pandemic will provide the
push to carry out the necessary structural economic reforms in Russia remains to be seen.
“Без трудa не вытащишь и рыбку из прудa.” Indeed, “without effort you won’t even pull a fish out of a pond” is a
very relatable saying as it is similar to others such as “no pain, no gain,” and “nothing comes easy”. This Russian idiom
reminds us that nothing can be done without sufficient effort. We may not know this but Russians have hard lives. Thus,
this saying promotes hard work to encourage everyone to realize that without it, nothing is possible.

References
Websites

EurostatStatistics Explained. (2020, March). Russia-EU – international trade in goods statistics. Retrieved October 01, 2020, from
https://ec.europa.eu/eurostat/statistics-explained/index.php/Russia-EU_%E2%80%93_international_trade_in_goods_statistics

Export Genius. (2019). Russia Export Data. Retrieved October 01, 2020, from https://www.exportgenius.in/export-import-trade-
data/russia-export.php

Ilitsky, R. (n.d.). 13 Russian Idioms as a Blueprint for a Better Life. Retrieved September 30, 2020, from
https://www.fluentu.com/blog/russian/russian-idioms-2/
Michigan State UniversityInternational Business Center: Broad College of Business. (2020). Russia: Trade Statistics. Retrieved
September 18, 2020, from https://globaledge.msu.edu/countries/russia/tradestats

Riasanovsky, N., & Hellie, R. (2020, September 26). Russia. Retrieved September 30, 2020, from
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Russia Economic Report #43. (2020, June 30). Retrieved September 18, 2020, from
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Societe GeneraleImport-Export Solutions. (2020, September). Russia: Country Risk. Retrieved September 18, 2020, from
https://import-export.societegenerale.fr/en/country/russia/covid-country-risk

Trading Economics. (2020, July). Russia Imports. Retrieved September 18, 2020, from https://tradingeconomics.com/russia/imports

Workman, D. (2020, September 15). Russia's Top 10 Exports. Retrieved September 18, 2020, from
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World Integrated Trade Solution. (2018). RUSSIA Trade Summary. Retrieved October 01, 2020, from
https://wits.worldbank.org/CountryProfile/en/Country/RUSSIA/Year/2018/Summary

Videos

Farm Credit Canada. (2014, February 4). Ask an Expert: Understanding Russia’s Import-Export Market. [Video]. YouTube.
https://www.youtube.com/watch?v=Bvy6d6NZ5u0&t=132s

IntroBooks Education. (2018, February 5). Inside Russian Economy Documentary  [Video]. YouTube.

https://www.youtube.com/watch?v=XVE80yXByM8&t=231s

CoolVision. (2018, March 30). Russia. Interesting Facts About Russia. [Video]. YouTube. https://www.youtube.com/watch?
v=mORJmK1Ljgk&t=312s

Economics Explained. (2019, December 15). The Modern Economics of Russia [Video]. YouTube. https://www.youtube.com/watch?

v=6wBvG533K8A&list=PLh6oq2EbSNEd8wPXDYSIILG8NrqPg7U-f&index=14