Non-oil-and-gas exports from Russia fell to a seven year low
The Russian export of goods excluding oil, gas, and oil products decreased by another 10% in 2016, as reported by the Central Bank of Russia.
Despite the authorities' statements about success in the development of non-mining sectors of the economy, the volume of non-oil exports totaled $128.3 billion, the lowest since 2009.
According to the Federal Customs Service of Russia, over the past 11 months the export of machinery fell by 1.5%, mechanical equipment by 29%, chemical products by 23.7%, metals and metal products by 13.8%, and medicines and pharmaceutical products by 11.7%.
As clarified by Finanz.Ru news website, non-oil exports are falling for the fourth consecutive year. Compared to 2012, its volume decreased by almost 30%.
Paradoxically, the drop in oil price harmed primarily the non-raw-materials sector of the economy, says the leading expert of the Development Center of the Higher School of Economics (HSE), Nikolai Kondrashov.
Due to the devaluation of the ruble, the industries associated with extracting mineral resources and their transportation abroad, are now even better than before. During the two years of the economic crisis, the mining industry has risen by 3.6%. The manufacturing sector, which is dependent on imported technology and equipment, and as a result, on the ruble exchange rate, has shrunk by 7.2%. We can start seeing the "structural deterioration" of the economy, and its tilt toward resource sector, Kondrashov says.
According to the director of the Economic Policy Program of the Carnegie Moscow Center, Andrei Movchan, Russia’s entering the export markets with anything other than oil and gas is hampered by the poor quality of goods produced. Surrogate ingredients are used in order to reduce costs and speed up the production process, the production technology is not maintained, and the regulators who monitor the quality of the products are corrupt.
"The development of Russia’s new export strategy requires creating conditions for the simultaneous achievement of both the financial efficiency of production within its territory and of an acceptable level of quality for produced goods. Unfortunately, there are no prerequisites for the appearance of these factors," Movchan complains.
He added that in 2017, the production volume in Russia will continue to fall, while "we should expect further rapid decline in the quality of products in a wide range of industries and a growth in the level of counterfeit goods and falsification both in the ingredients and in the final product."