The Novichok poisoning case in the United Kingdom, allegedly caused by Russian agents seeking to execute a Russian spy who had defected to the UK, has had no apparent impact on bilateral trade. In fact, although UK-Russia trade dropped significantly following sanctions imposed on Russia following the Russian repossession of Crimea, it has been showing signs of recovery.
In the first two quarters of this year UK-Russia bilateral goods trade is up 32 percent compared to 2017, according to the Russo-British Chamber of Commerce.
UK goods exports are up 19 percent and Russian goods exports are up 44.7 percent. The growth in Russian exports is mainly driven by large increases in the petroleum and non-ferrous metals sectors. UK goods exports have been more equally split by sector but have seen strong increases in the power generating machinery, transport equipment, and vehicles sectors.
Looking at longer term growth, the Russian economy generated £5.7 billion in total UK exports in 2016. Russia was the UK’s 24th largest global market for goods in 2016, larger than Brazil and South Africa and just behind India.
UK services exports to Russia have grown significantly over the past decade too. They have increased 510 percent since 2000 and 79 percent since 2010. They were worth £2.78 billion in 2016 – roughly the same as goods – £2.9 billion – which have seen a precipitous drop since 2013. Russia was the third fastest growth market for UK services between 2010 and 2015.
This means that in common with many other markets, Russian bilateral trade is on the up, although it has some way to go to reach pre-crisis levels in the UK, when the Russian domestic market was worth £7.6 billion in UK total exports.
Chris Devonshire-Ellis of Dezan Shira & Associates comments: “British trade with Russia is still dominated by politics; however, with Brexit there may well be a brighter future ahead as the UK will need to re-establish trade partners. The Russian market is in the ascendancy and there is a huge amount of pent-up demand. If understandings can be reached over NATO expansion plans and the situation in Ukraine then there is plenty of scope for rehabilitating the Russian market for British businesses.”
Russia Briefing is produced by Dezan Shira & Associates. The firm provides business advisory and foreign investment services to international businesses throughout Asia and maintains partners in Moscow, St.Petersburg and Vladivostok. Please contact the firm at email@example.com or visit www.dezshira.com
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