Facts and figures on new WTO Member Russia
By Virginia F. Bodmer-Altura
Russia has many faces, we mostly take only note of the political international communications by the President and the Prime Minister. The recent accession of Russia necessitates a focus on the Russian Economy and its prospects
In 2010, Russia had around 50 million middle class type of citizens or 35 % of totally 141.9 million inhabitants, eager to consume electronics, fashion products, giftware, jewellery and toys. The GDP amounted to USD 1487515.6 million and the per capita income was USD 19190. It is the aim of the Russian Government to transform the country into the world’s fifth largest economy by 2020.
Russia offers also opportunities for foreign investment in local production of consumer goods, but also to install services. In 2010 The FDI Foreign Direct Investment inflow from the EU amounted to EUR 7.7 billion (EUR 7.3 billion) and the accrued figure was EUR 42.0 billion. Russian FDI to the EU was EUR 7.9 billion (EUR 8.4 billion) and accrued to EUR 120.0 billion (EUR 96.5 billion)
In 2010 total worldwide Russian Imports of goods amounted 2010 to EUR 163,4 billion (EUR 114.1 billion), its exports amounted to EUR 280.5 billion (EUR 202.2 billion). The trade figures with the EU: imports from Russia EUR 198.4 billion (EUR 160.1 billion) and exports to Russia EUR 108.4 billion (EUR 86.1 billion). The EU 2011 textile imports from Russia amounted to EUR 59.5 million (Rank 25 within EU) and clothing EUR 17.2 million (Rank 50), the textile exports to Russia were EUR 955.7 million (Rank 7) and clothing EUR 3077.6 million (Rank 2).
In 2010 Russia’s main 10 trading partners for imports are the EU, China, Ukraine, Japan, USA, South Korea, Turkey, Brazil, Kazakhstan, Switzerland and for Russian exports the EU, China, Turkey, Ukraine, Japan, USA, South Korea, Switzerland, India and Kazakhstan.
Of importance is the customs union between Russia, Belarus and Kazakhstan that came into force on January 1, 2010 and allows the duty-free movement of goods between the three countries and a common external tariff on imports from other countries, as well as removing internal barriers to trade while harmonising foreign trade policies.
An obstacle in developing trade was the difficulty for ordinary Russian importers to secure trade financing from banks in Russia, and therefore this was a hampering factor to expand trade. In addition, distribution in Russia is fragmented and there are also sudden changes in sourcing practices, as well as a growing demand for greater assortment. These had some effect, for instance on the development of exports from Hong Kong and in addition, Hong Kong had to face fierce competition from China Mainland, also in manufacturing components in Russia, because of a growing interest by Russian countries to source quality parts from other Asian countries, and for that Hong Kong is a turntable and offers also adequate financial assistance.
In view to the WTO World Trade Organisation’s accession of Russia, HKTDC Hong Kong Trade Development Corporation, respectively its Research Department, evaluated in March 2012 the Hong Kong imports and exports with Russia and the development can be had from the following table 1
The table shows that the opening up of the Russian economy has paid a dividend: Hong Kong-Russia trade grew by more than 370 % and in 2010 Russia surpassed Hungary in total exports, thus becoming Hong Kong’s top export market in Central and Eastern Europe.
According to some estimates (including the ones from the World Bank and announcements by Russian authorities) the WTO accession will result in a boost of the Russian GDP of around 2.8 % in the short term and 3.3 % in the medium term and 11 % in the long term. Russia in turn has agreed to undertake a series of long awaited commitments to accelerate its integration into the world economy, mainly an easier access for goods and services.
Looking into the details of Hong Kong’s total exports of selected products to Russia the development since 2009 is considerable and can be had from table 2
The examples of Russian committed service liberalisation can be had from table 3
Also the development of the China-Russia trade since 2009 is impressive and is reflected in table 4
The Russian trade figures with the important world regions in 2010 can be had from the following tables 5 to 7
The full picture of Russia’s major import and export partners and major trade partners can be had from tables 8 to 10
The Russian preparation of the WTO accession is impressive and it can be expected that with the accession now manifest these developments will accelerate and also financing of trade will become easier. All in all, Russia will become an important world trade player in the next future. With the WTO accession there are also hopes that the legal system of Russia will be reformed in a more transparent manner and at expected worldwide standards.