러시아 경제: 제재와 도전에 맞서다

Following the previous year, the Russian government recently released GDP data for 2022, showing a negative growth rate of 2.1%. These numbers are much better than expected. Initially, Putin predicted negative growth of 2.5%, while the IMF predicted negative 3.0%. There were also predictions of over 15%.

Western sanctions did indeed cause Russia great losses, but they were not as great a force as imagined. The IMF even expects Russia's GDP to show positive growth again in 2023.

Looking at the details, wholesale retail, logistics, and manufacturing decreased, while demand for agriculture, livestock, forestry, fishing, construction, mining, information, and national defense increased.

Among the industries that declined, manufacturing is the most representative. Taking cars as an example, new car sales in Russia in 2022 were 680,000 units, a decrease of almost 1 million units compared to 1.66 million units in 2021. Calculating the sales amount, it decreased by about 139 billion yuan. If we consider only Russian domestic production among new car sales, it amounts to only 450,000 units, falling to the 1991 level.

But what's interesting is that while used car sales in Russia increased by 14% last year, new car sales plummeted. This does not indicate that Russians' wallets have reached their lowest level, but rather that they are hesitant to spend on a large scale due to the uncertainty of the situation.

The withdrawal of Western capital caused a downturn in manufacturing, which also affected logistics and wholesale, making it the main reason for Russia's GDP decline.

Among the growing industries, agriculture is a big bright spot. In 2022, Russia's grain production surged by 24%, exceeding 150 million tons, and exports also increased by 12%, exceeding 70 million tons, with export value exceeding $20 billion.

Russian agriculture is one of the rare bright spots ever. We know that the Soviet Union during the Cold War was a food importing country that had to import food. At that time, up to 50% of foreign currency was needed to import food, and the food problem was one of the reasons for the collapse of the Soviet Union by the West.

After the collapse of the Soviet Union, Russia's agricultural situation did not improve significantly, and food had to be imported for a long period of time. In 2010, food production was only 60 million tons, and Russia's domestic needs required at least 70 million tons per year. As you know, although Russia's arable land area is larger than China's, the quality is relatively average due to the cold weather.

Even though it has more arable land than China, its food production cannot meet domestic demand, something Russia suddenly realized after the Crimea incident. And it has invested at least $3 billion in subsidies each year to boost food production, encourage purchases of domestic agricultural machinery, and introduce tax cuts.

Thanks to these efforts, Russia's food production has skyrocketed since 2016, turning the country from a food importer to a food exporter, with pretty decent growth every year.

By 2021, food exports had already risen to become the second largest import category, like military supplies.

Additionally, it was somewhat surprising that the completed construction area exceeded 100 million square meters for the first time. However, no specific cause for the increase was found.

When good and bad are mixed, there are problems. As the sun set, Russia's oil and gas production and imports began to decline, with oil exports falling by 3.9% in the third quarter to an average of 4.95 million barrels per day. This is mainly due to lower imports from the European Union.

By January of this year, oil and gas imports had decreased by 46% compared to the same period last year, and due to increased fiscal spending, Russia has recorded a fiscal deficit for the first time in a long time. Oil and gas export revenues account for 40% of Russia's fiscal revenues, making it the largest source of funding. If this area is not stabilized, there is a possibility that fiscal deficits will continue to occur.

Of course, the EU's current reductions have already been reduced, and some of the remaining countries, including China and India, are likely to be stable, so a significant decline in oil and gas imports is unlikely.

Finally, inflation stood at 11.9% last year. At the time of the initial sanctions, it reached 20%, but it is expected to gradually decline and fall to the 10% range this year.

Most countries do not have enough resources and have to import most goods and resources. Inflation can further harm import and export transactions as more foreign exchange must be used to purchase them. It's a vicious cycle.

However, unlike other countries, Russia has sufficient resources and does not need to import many resources. Plus, with the world's largest industrialized country next door, there are no problems with the supply of most goods. So we can expect things to return to normal in the future.

Russia suffered from inflation last year, largely due to the initial sanctions scare. I watched a few videos made by students staying in Russia. In March and April, Western brands withdrew in droves and stores were temporarily empty, but they have gradually recovered since then. After all, we have these items, and to some extent they can be produced domestically in Russia.

Coke, McDonald's, etc. released a large number of free versions in Russia immediately after their withdrawal last year, simply because making hamburgers is not an advanced technology. If Russians feel that the domestic version is not tasty enough or not mature enough, we already have many mature fast food brands.

In summary, Russia's economic performance over the past year has been both good and bad. The biggest problem is the decline in oil and gas revenues, which are so large that agriculture and other industries will find it difficult to replenish them in a short period of time. Russia could theoretically secure funding in two ways. The first is short-term: opening up resources on a larger scale. Russia has the world's largest established reserves of oil and gas, as well as various mineral resources.