July 8, 2017 – Fort Russ News –
– Klaus DORMANN, in Ostexperte.de, translated from German by Tom Winter –
Foreign trade with Russia in focus
- German-Russia exports rose by more than one fourth despite sanctions
- Can the deep drop in exports since 2012 be picked up quickly?
- How strongly do the sanctions dampen the export and growth of the EU?
- New estimates by the East Committee and Berlin Economics
In the first four months of 2017, according to the announcement by the Eastern Committee of the German economy, German exports to Russia were about 27 percent higher than in the previous year. It should, however, be taken into account that they had fallen by 43 per cent between 2012 and 2016. At the same time, all German exports continued to grow.
Russia’s share of the German goods exports has halved since 2012 to almost 1.8 percent. In the ranking list of the German esport countries, Russia fell back to 16th place. What are the prospects for sustainable growth and an early recovery in trade with Russia?
German exports to Russia fell by 43 percent in three years
In 2012 the German exporters in Russia reached their peak at around 38 billion euros, almost doubled since the year 2000 at high growth rates in the Russian economy. 2014 then began the oil price collapse – and led to two years of recession in Russia. The ruble depreciated drastically, imports from Germany became much more expensive for Russian customers. Moreover, mutual sanctions were imposed on the Crimean crisis.
German exports to Russia collapsed. Within three years the export revenues in Russia fell by about 43 per cent to around 22 billion euros in 2015. Only in 2016, when the recession waned and Russia’s economy shrank by only 0.2 per cent, the German export economy was able to stabilize its revenues in Russia at the depressed level (- 0.3 percent).
Left numbers, and solid line: over-all trade in billions of Euros. Dashed line and column of numbers on right: trade with Russia
Germany-Russia trade in billions of Euros:
Percent change from prior year in red
After stabilization at the depressed level, now a strong increase in exports
The deep decline since 2012 has to be taken into account with the one-fourth rise of German exports to Russia now reported for 2017. According to the Eastern Committee, German deliveries in the first four months were about 27 percent higher than in the previous year. The value of German imports rose by as much as 34 percent (exact results have only been published for the first three months, see table).The Eastern Committee is confident about the further recovery of bilateral trade. They believe that the trade could enjoy double-digit growth in 2017: “10 percent and more I think is sustainable,” said Wolfgang Büchele, Chairman of the German Press Agency. This presupposes that the oil price and the ruble price remain stable.
Doubts about the rapid recovery of exports to earlier levels
There is much catching up bfore the level of 2012 is reached again. And whether growth rates under President Putin that will ensure a rapid recovery of German exports to the record level reached in 2012 is a question.
Der Spiegel‘s former Moscow correspondent Benjamin Bidder writes in a post on the discussion page “Russia controversy” of the German-Russian forum:
“The re-emergence of German-Russian trade is above all due to the recovery of the Russian domestic climate.” He also made it clear that it was not the sanctions that pushed Russia’s economy into the recession, but the oil price decline as of the turn of 2014/2015. The sanctions are still in force, but the trade is still picking up again.
According to Bidder, German businessmen also agreed with the former finance minister Kudrin, that Russia’s economy needed profound structural reforms with a suppression of the growing state-owned groups and a new business model in order to grow as fast as other BRICS countries. And these steps were no longer to be expected from Putin.
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