Princeton,NJ/ 360prwire/ December 17/
Exports from Moscow are driving a rapid recovery in Russia’s foreign trade after the challenges of last year. While the recovery is due in part to an overall stabilization of the global economy, the city’s support for local exporters also plays a crucial role.
Russia’s global exports totaled USD 299.1 billion in the first eight months of 2021, up 44% year-on-year. Much of this jump can be explained as a bounce-back from the recession that hit during the first wave of the pandemic, but the details tell an interesting story: during the worst of the lockdown only the raw materials sector experienced a slump in sales, while Russia’s non-resource non-energy exports continued to do well. Analysts are forecasting that the country’s non-resource non-energy exports will jump another 15-20% by the end of 2021 to over USD 180 billion.
Nurturing the non-resource sector of the economy is one of the goals of a new national program aimed at reducing Russia’s dependence on the global hydrocarbons market and diversifying exports. An expressly stated objective of the program is to increase non-resource non-energy exports at least 70% from 2020 to 2030.
Moscow is one of the country’s largest sources of non-resource exports, accounting for 16.9% of the total for the first nine months of 2021. The capital city’s exporters saw their foreign sales up 28.1% year-on-year to USD 23.16 billion.
Breakdown by Category
Food and industrial products make up the lion’s share of Moscow’s exports, with the strongest performers in chemicals and high-tech. Top export items include turbines and parts, equipment for green energy systems, and communications equipment. The capital city’s high-tech exports were up 4.4% in the third quarter of 2021 and accounted for over 60% of local non-resource non-energy exports.
Non-resource non-energy exports from Moscow have jumped 30.9% in the past two years, from USD 17.69 billion for the first nine months of 2019 to USD 23.16 billion for the same period of this year. Kazakhstan, Belarus, and the United States are the leaders among the 183 countries importing the capital city’s goods, with purchases increasing by an average of 27-30%.
Foreign buyers demonstrate demand for local companies machines and parts (USD 1.9 billion), electrical equipment (USD 1.2 billion), plastics and plastic items (USD 884.38 million), and vehicles (USD 437.33 million).
Demand for local agro-industrial products is also on the upswing. According to data from the Mosprom Center for Export Support, agro-industrial exports from the capital city reached USD 2.8 billion in the first nine months of 2021, up 10.9% year-on-year. The most promising categories in this segment include dairy, meat and meat products, confectioneries – especially chocolate – and non-alcoholic beverages (soft drinks, juices, mineral waters). The Mosprom Center reports that confectioneries are one of the top performers, with export sales reaching USD 165 million for the first nine months of 2021, up 53.9% from USD 107.85 million in 2019.
Government support has been fundamental in powering Russia’s foreign trade. Exporters have access to a wide range of financial and other types of support, from tax and property preferences to grants and targeted subsidies. For example, companies in the agro-industrial sector can receive compensation for up to 90% of their costs for export logistics and product certification.
In Moscow, the city’s department for investment and industrial policy opened the Mosprom Center for Export Support to help local companies expand their presence in foreign markets and uncover new opportunities. The Center’s experts provide individualized assistance on the basic, practical aspects of foreign trade, prepare industry reports, locate potential partners, and support companies through negotiations and contract signing.
“Mosprom’s buyers program includes multiple steps,” explains Alexander Prokhorov, head of the department for investment and industrial policy. “At the preparation stage, Mosprom assesses a company’s readiness to sell in foreign markets and analyzes the target markets, demand, competitors, and other important aspects. Once the company has a target market and launch strategy, the Center helps find potential partners through participation in business mission and international trade shows. A lot of work goes into business missions behind the scenes: Mosprom’s experts find and vet buyers, help companies adapt their presentations, get them ready for negotiations, and offer legal support.”
In 2021, Mosprom experts held 13 business missions for 86 manufacturers and helped 29 exporters attend eight international trade shows. Target markets include countries in Latin America, the Middle East, Southeast Asia, and Africa, with events held both in-person and online.