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Global Demand and Priority Areas for Russian Exports

May 29, 2017, 18:00 UTC+3
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Since the 2000s, Russia has been looking for opportunities to shift its export focus from commodities to more value-added products by developing high-potential manufacturing industries and supporting exporters.

  • According to the Federal Customs Service (FCS), the share of fuel and energy products in the Russian exports stood at over 58% in 2016. Unprocessed metals, soft commodities and timber also account for a significant part of exported goods.
  • Even though the share of hi-tech products in the Russian exports is growing (from 2013 to 2016, it went up from 10.2% to 14.5%), this is mainly due to softer oil prices. According to Rosstat, Russia's shipments of hi-tech products in 2016 shrank by 6.3% y-o-y by value.
  • Yet, exports of some high value-added products are gaining a big momentum. For example, the FCS data show that shipments of land vehicles (excluding railway transport) to non-FSU countries was up 67.8% in 2016, while exports of optical instruments/devices and electrical equipment expanded by 18.6% and 26.4%, respectively. The total share of machinery, equipment and vehicles in Russian exports was 8.5% (USD 24 billion) in 2016, while the same metric for exports to non-FSU countries stood at 7.3%.
  • There is a brisk demand for Russian arms in the global market. Russia is second only to the US as the world's largest armaments exporter (last year, Russia's arms shipments to overseas markets exceeded USD 15 billion).

The Russian Government provides support to non-commodity exporters, including financial incentives (low-interest loans, risk insurance and government guarantees). The Export Insurance Agency of Russia (EXIAR) and Eximbank of Russia are the two institutions responsible for financial support to Russian exporters. In 2016, these were merged into the Russian Export Center Group (the REC Group).

In 2017, hi-tech exporters will have access to new types of targeted support from the REC, including:

  • Reimbursement of up to 80% of transportation costs,
  • Reimbursement of up to 80% of exhibition participation costs,
  • Reimbursement of costs to protect intellectual property rights and certify products,
  • Low-interest loans to foreign entities purchasing Russian hi-tech products.

In 2017, the Government is planning to come up with a wide range of new financial and non-financial incentives for Russian hi-tech exports, including the project on international cooperation and export approved by the Presidential Council for Strategic Development and Priority Projects for a period up to 2025. Under this project, some 6,600 exporters with total shipments of USD 20 billion will receive government aid this year, with subsidised loans for these purposes amounting to RUB 165 billion. By 2025, these numbers are expected to double.

Non-commodity exports are also set to see a nearly two-fold increase, with the Ministry of Economic Development predicting the agricultural, railway, aircraft and automotive engineering industries to achieve that aim as early as by 2018.

Yet, that does not stop Russia from expanding its commodities exports, primarily in natural gas. Gazprom is currently running several large gas pipeline projects, including Nord Stream 2 (estimated capex of EUR 9.5 billion), TurkStream (EUR 7 billion) and the Power of Siberia (RUB 800 billion).

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