Imports in Russia returned to pre-crisis levels

Imports continue to grow rapidly in the first quarter of 2021. According to the Federal Customs Service, the growth in the cost of imported goods from non-CIS countries (this is the largest part of imports in the Russian Federation) in March in annual terms amounted to 24% after 15% growth in February. Raiffeisenbank analysts have calculated that taking into consideration the seasonality month-on-month, the growth of imports from non-CIS countries is also accelerating – to 6.5% in March after 4% in February.

The acceleration in the growth rate of imports in annual terms is largely due to the effect of the low base at the end of the first – beginning of the third quarter of 2020, when the import of goods contracted against the background of epidemiological restrictions. The month-on-month growth Raiffeisenbank associates with fundamental factors – the recovery of domestic consumer and investment demand against the background of continuing budgetary stimulus and the post-crisis recovery of the share of imports in domestic demand, which before the coronavirus crisis was at 23%, at its peak it dropped to 21%, and in the fourth quarter of 2020 rose again to 22.7%.

"In the context of economic recovery, investment plans (including the ones of the state and state-owned companies) will be "catching up." This will be manifested in the accelerated recovery of the share of imports and, accordingly, its increase (compared to the growth of the economy)," the bank's analysts believe. It should be noted that earlier research by the HSE recorded only a slight decrease in the dependence of the Russian industry on imported investment equipment. At the same time, current polls by the Gaidar Institute indicate that investment optimism in industry has not yet replaced investment pessimism.

Raiffeisenbank also notes that the outrunning recovery of imports is negative for the ruble and in the second quarter the current account balance of the balance of payments will be equal to or less than the volume of foreign currency interventions by the Ministry of Finance. According to the Central Bank, in the first quarter of 2021, the real effective exchange rate of the ruble against the currencies of the main trading partners of the Russian Federation decreased by 13.9% in annual terms. However, the consensus forecast by FocusEconomics assumes that in 2021 exports will still grow faster than imports – by 14.3% against 10.2%, and in 2022 its growth will slow down to 6.5% with an increase in imports of 7.4%

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