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Thursday, August 16, 2007

Annals of the Russian "Economy"

RosBusinessConsulting reports that Russia's gas exports have plummeted:

Russia's gas exports decreased by 14.55 percent to 81.6bn cubic meters of gas in January-June 2007, against a similar timeframe in 2006, the Federal Customs Service of Russia reported. Consequently, gas exports proceeds amounted to USD19.015bn in the reporting period, a 12.73 percent decrease compared to the first half of 2006. Russia's gas supplies to the non-CIS countries declined by 16.98 percent to 70.9bn cubic meters, and the CIS countries - up 5.94 percent to 10.7bn cubic meters of gas. According to the Russian Industry and Energy Ministry, in 2006, the country produced 656.29bn cubic meters of natural gas, which is expected to increase 1.33 percent to 665bn cubic meters this year.

Meanwhile, RIA Novosti reports that Russia's foreign trade surplus is has also fallen dramatically:

Russia's foreign trade surplus declined 17.8%, year-on-year, in January-June 2007, to $70.7 billion, the Federal Customs Service said Tuesday. Russia's foreign trade surplus decreased in the reporting period as imports grew faster than exports, the customs service said. In particular, the surplus of trade with countries excluding the Commonwealth of Independent States (CIS) declined to $61 billion from $76.4 billion a year earlier, while trade surplus with CIS states, a loose association of former Soviet republics, was actually unchanged at $9.7 billion, the customs service said. The European Union continued to be Russia's leading economic partner in the reporting period, accounting for 52% of its trade turnover. CIS states accounted for 15.3% of Russia's foreign trade, the Eurasian Economic Community (EurAsEC) contributed 8.7%, and Asia and Pacific Economic Cooperation (APEC) countries made up 18.5%, the customs service said.

Russia has the strengthening ruble to thank for both of these bad results. As the ruble appreciates against the euro and dollar, Russian products become more expensive for foreigners to buy, and hence less desirable. Combine that with Russian goods' infamous reputation for shoddy quality, and consumer products become virtually unmarketable. This deprives the Russians who make them of wages and jobs. Meanwhile, foreign goods flow into Russia because they are cheaper for Russians to buy, giving wages and jobs to foreigners (and the goods are accessed only by Russia's rich -- working for an average wage of $3/hour, the man on the street can't afford nice foreign things).

When Russian nationalist morons brag about the value of the ruble, they are really consigning their own economy the dustbin of history. As always, Russians are their own worst enemy.

1 comment:

Anonymous said...

Don't worry phoby, this problem will solve itself. You see, you also posted an account of Russia's declining natural gas exports. And Russia's oil exports are going to decline too, as Russia's domestic energy consumption rises. So Russia's huge current account surplus is on a track to decline, which is no bad thing. Russia's huge trade and current account surpluses are the drivers of ruble appreciation. As those huge surpluses decline, upward pressure on the value of the ruble will decline too.

This will increase the competitiveness of Russia's other exports, and reduce the competitiveness of products Russia imports. Thus, Russians will gain income both from increased non-energy exports, and from supplying more of Russia's domestic demand.