According to experts, many sectors of the Russian economy have enormous and not yet fully exploited potential, including export potential.
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GET OFF THE NEEDLE
You look at the balance sheet of the Russian budget, and your tongue no longer dares to call oil “black gold.” Federal treasury revenues for half a year have decreased by almost 12%, and the main reason is that revenues from the sale of oil and gas abroad have fallen by 47%. Now it is 3.38 trillion rubles, while in the same months of 2022 it was almost 7 trillion.
But so-called non-oil and gas revenue rose 17.8% in six months to 9 trillion rubles. Before our eyes, it looks like Russia is starting to pull itself off the notorious oil needle (although not without the “help” of sanctions).
And every time it comes to this “crying”, the question arises: what will our new oil become? Are there any export items that we can seriously increase so that Russian companies earn money and the budget receives enough taxes?
Of course! According to experts, many sectors of the Russian economy have enormous and not yet fully exploited potential, including export potential.
– Of course, there is no need to abandon oil and gas. But it’s time to change the structure of export earnings, says Georgy Ostapkovich, director of the Center for Market Research at the Institute for Statistical Research and Knowledge Economy at the Higher School of Economics. – Now the Russian economy is ready to sell basic products, but it needs to be rebuilt to offer goods with high added value. In addition to manufacturing products, high technologies, IT services, consulting. Such activities can bring significant income to the budget.
Let’s explain what kind of added value this is. This is the additional amount by which the product becomes more expensive in the processing process. For example, milk is the same price, and sour cream is more expensive. Or the wood has a price and the furniture another. And you can earn much more with it.
Together with experts, we have outlined the top 5 types of Russian products that can compete with power carriers and even squeeze them in the future.
Food: room to grow
Export volume in 2022: $41.3 billion
Many experts are sure that the number 1 candidate for the role of our “new oil” is food. In 2022, Russian agricultural exports grew by 12% and amounted to more than $41.5 billion. Russia sends food to 160 countries of the world! Among the exporting countries, we are in 18th place and we have room to grow, with this or that territory.
– Given the geopolitical situation, Russia’s food exports will increase, in particular due to African countries. Especially its northern part – Egypt, Algeria, etc., says Alexander Nikulin, director of the Agricultural Research Center of the Russian Academy of National Economy and Public Administration. – If we talk about the prospects in general, then there are calculations that under favorable conditions Russian exports can feed 500 million people.
What will we feed? The director of the Center for International Agribusiness and Food Security of the Russian Academy of National Economy and Public Administration, Anatoly Tikhonov, names three main areas.
– There are good grain crops in Russia. In addition, the infrastructure capabilities for cargo and transportation are actively developing. Therefore, all the prerequisites exist to increase the volume of grain trade. During the year we sold 58 million tons, and this is not the limit, – notes Anatoly Tikhonov. – Oil will also be in the price. Now there is a drought in southern Europe, and the main production of olive oil is there: Spain, Italy, Greece. Therefore, in Europe there is no longer enough oil. Russian sunflower oil will not be left without work there. We are ready to supply it, the oilseed crops are good. Russia is also ready to feed other countries with fish. Production volumes are growing and we are ready to sell more.
Russia has good grain crops. In addition, the infrastructure capabilities for cargo and transportation are actively developing.
Photo: Vitaly TIMKIV
And that’s not all. For example, Russian pork, chicken, and sugar have good potential. According to the expert, we have overproduction in this part and it was decided to sell the surplus abroad. Russian pork, for example, is in high demand in China and Vietnam.
Metals: southeast heading
Export volume in 2022: $52.2 billion
Europe rejected our metals. In April 2022, the European Union banned the import of steel products (rolled products and tubes) from Russia. By the way, the volume of this export was about $3.6 million. Later, the restrictions affected ferrous metals: carbon steel, semi-finished products, various types of corrosion-resistant steel, etc.
But we have where to send metals and products from them. And for much more serious amounts.
– The products of the metallurgical industry are mainly redirected to China, India, Vietnam, Turkey, – lists Maria Gachenko, an expert at the Center for Economics of the Non-Resource Sector of the Center for Strategic Research (CSR). – In these markets, there is a significant unrealized export potential of Russia for the supply of metals and products from them: on the Chinese market – $ 119 million (per year, – Ed.), Turkey – $ 29 million, Vietnam – $24 million, India – $12 million These figures mean that Russian exporters could additionally supply metals and products from them to the markets of these countries for the indicated amounts.
Khimprom: opening up America again
Export volume in 2022: $9.8 billion
Rubber, plastics, rubber, detergents, soda, varnish, starch, cellulose – these and other products of the Russian chemical industry are in great demand abroad. And this is what is interesting:
“Despite the sanctions imposed against Russia, the United States remains the main importer of Russian products from the organic and inorganic chemical industry,” says Natalia Kochetkova, a leading expert at the Center for the Economics of the Non-Resource Sector at the Center for Strategic Research. – For example, from January to April 2023, we supplied 36% of total “chemical” exports there.
The products of the Russian manufacture of machines and tools are respected in the world.
Photo: Shutterstock
Exports to other countries are also growing (data from the first four-month period of 2023):
to Azerbaijan – 2 times,
to Uzbekistan – by 74.4%
to Armenia – by 51%
to Türkiye, by 12.6%
– In 2022, China accounted for about 12% of the total volume of exports of the Russian chemical industry, – continues Natalya Kochetkova. – The largest unrealized export potential of Russia in terms of supplies of chemical industry products is in the markets of China ($1.1 billion), India ($371 million), Turkey ($179 million).
Fertilizers: a trip to Türkiye and Egypt
Export volume in 2022: $19.3 billion
Various types of fertilizers are also products of the chemical industry. However, its exports are always highlighted in a separate article. And now he’s setting records.
According to experts from the Center for Strategic Research, today our fertilizers are “oriented” mainly to the markets of Brazil, India and Mexico. The share of fertilizer exports to these countries in January-April 2023 amounted to 61%.
Compared to the same period in 2022, the export of Russian fertilizers to Egypt (6 times) and Turkey (3 times) has grown significantly. However, there is still potential, and considerable. According to the calculations of CSR experts, only Turkey and Egypt can buy our fertilizers for another 318 dollars a year.
In recent years, our turbojet engines, nuclear power equipment, electric accumulators, refrigeration equipment, passenger cars and merchandise, etc., have been the most valued abroad.
Photo: Anatoly ZHDANOV
Mechanical Engineering: Engines and Trade
Export volume in 2022: $20.4 billion
The products of the Russian manufacture of machines and tools are respected in the world. In recent years, our turbojet engines, nuclear power equipment, electric accumulators, refrigeration equipment, passenger cars and merchandise, etc., have been the most valued abroad.
Following the imposition of sanctions, the demand for these products was expected to fall. But our exporters, like many other industries, have turned south from Europe and North America.
Here are the data from the Center for Strategic Research from January to April 2023. For this period:
25% of all Russian exports of engineering and instrumentation products went to Uzbekistan
12.4% – to Türkiye
8.5% – to India
3.1% to Brazil
At the same time, shipments to Brazil increased by 61%.
The experts also calculated the amounts that our machine manufacturers could earn from exporting. The biggest potential is in the markets of China ($981 million per year), Turkey ($206 million), Belarus ($74 million), Uzbekistan ($71 million), and India ($54 million).
Photo: Dmitri ORLOV
QUESTION EDGE
Is there a chance that Russia will move away from commodity exports to non-commodity exports?
“Despite the general reduction in the volume of goods deliveries from Russia due to sanctions, there is a positive trend towards an increase in the share of non-commodity non-energy exports,” says CSR expert Natalia Kochetkova. . – The restoration of supplies of Russian non-commodity goods occurs due to the redistribution of export flows to the markets of “friendly” countries. First of all, to the markets of the CIS countries, the Middle East (Turkey, Iran), Asia and Latin America. But at the same time, it is necessary to develop transport and logistics infrastructure: these are sea corridors through the ports of Vladivostok, Novorossiysk to facilitate trade with Turkey, India, as well as land corridors through the Trans-Baikal Territory towards Kazakhstan, Mongolia. expand trade mainly with China. In addition, there is an important condition for the growth of exports – this is the stability of financial agreements between countries.
HOW THEY MAKE THEM
Oil, fish and space
How other countries got out of the “raw needle”
Saudi Arabia
The main wealth of this country is also oil. For many years, almost all exports (80% of the total volume), replenishment of the budget, benefits, etc. they were based on it.
But recently, the authorities have begun to actively develop other industries and new exports. For example, a country spends a lot of money on space research. The production of medical equipment is developing. The country is heavily dependent on tourism with a focus on luxury resorts for the discerning public. To do this, they actively attract the best soccer players in the world. For example, Lionel Messi signed a three-year contract with a local tourism agency. He regularly spends vacations in this country and posts photos on social networks – according to the Western press, he will receive $ 25 million for this. And his eternal (now former) rival Cristiano Ronaldo has been playing in the local football league for almost a year. year.
Malaysia
Rubber and tin are the two pillars on which this country has been sustained until recently. However, 20 or 25 years ago, the Malaysians discovered a gold mine: palm oil. Thanks to them, it spread throughout the world, becoming an important item of export earnings for Malaysia. By the way, Indonesia joined them at the same time, realizing the benefits of the palm.
Especially for planting palm trees, the Malaysians freed up some cocoa plantations, felled old trees, and planted new ones more densely. In 2022, Malaysia exported 16 million tons of oil.
Chili
In the last century, copper was one of the main sources of income for this country. But he managed to push it back with the help of the fish. At first it was a state corporation that was dedicated to the breeding and sale of salmon, contributing all the income to the country’s budget. Over time, the authorities stepped aside and ceded their power to private companies.
Copper, of course, has not gone anywhere. Now it is 33% of world exports. But it gave way to a space for fish, fruit and wine.
