Russia, Belarus Bilateral Trade Up 9% 2022 YTD
Jury is out as concerns a lower than expected increase but mitigating circumstances remain
According to Dmitry Volvach, Russia’s Deputy Economic Development Minister, Russia and Belarus’ bilateral trade turnover increased by 9% during the first nine months of 2022, reaching US$30.5 billion. Volvach added that during that period, the volume of Russian imports from Belarus grew by 14.6%. There are two views of this increase – considering the high number of high value trade and loan agreements signed this year, this increase is rather meagre. On the other, the effects from several bilateral trade and loan agreements can be assumed to start showing results in 2023.
During a meeting between Belarus and Russia’s PMs in October, Belarus’ PM Roman Golovchenko said that the bilateral trade had risen by 12% year on year between January-August this year. Golovchenko predicted the total bilateral trade turnover to reach US$45 billion by the end of 2022. With three months left of 2022, increasing the trade turnover by US$15 billion seems unlikely. However, the signing of upcoming, major bilateral trade deals could make the countries’ bilateral trade rise sooner than currently anticipated.
Since around US$18 billion of Belarus’ exports have been blocked by Western sanctions this year, Belarus is putting all its efforts into redirecting its trade towards Russia, China and the rest of the world. Belarusian officials often emphasise the high demand and great possibilities on the Russian market for Belarusian producers.
Belarusian manufacturing, agrifood and service products are competitive on the Russian market. However, it’s hard to say if Russian companies and consumers will buy close to the number of products which Belarus wishes to offload on the Russian market. Most likely, the official Belarusian estimations include a fair bit of blue skies.
During the prime ministers’ meeting in October, Golovchenko said that Belarus’ planned to achieve 3.8% GDP growth in 2023. Belarus’ GDP contracted by 4.7% y/y between January-October 2022 and has continuously declined throughout the year. To bounce back from this year’s recession by a 3.8% GDP growth thus appears manageable.
Concerning Belarus’ redirection of exports to Russia, China and other non-Western countries have not yet compensated for the production and logistics chains that were broken by Western sanctions. In September alone, Belarus’ exports decreased by 4.8% compared to the same period in 2021. Considering the increase in supply prices (due to higher production costs), the corresponding reduction in physical volumes may be even greater.
Bilateral meetings last week included further talks on a bilateral agreement for the mutual recognition of electronic digital signatures, which according to Volvach is now being finalised. Volvach hoped that this bilateral agreement between Russia and Belarus could serve as a base for a future similar recognition within the Eurasian Economic Union (EAEU).
As a part of redirecting its foreign trade, Belarus has placed a lot of focus on trade with post-Soviet countries, with whom the Belarusian economy is already integrated and compatible. Belarusian officials have stepped up their support for further economic integration among the EAEU member states. With this, Belarus hopes to show its loyalty to Russia and to ease trade barriers for its own redirection of foreign trade. This includes Parallel Imports with Belarus warehouses starting to fill with Western products destined for Russian consumer markets – an issue that will affect 2023’s bilateral trade but has not yet kicked in during 2022.
Russia is also clearly viewing its intensified bilateral integration with Belarus as a good leading example of what it wishes to achieve with other post-Soviet countries. With more bilateral agreements being signed, Russia and Belarus will increase pressure on other post-Soviet countries to do the same.
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