Russian economists came to the conclusion that the increase in imports of investment goods in the second half of 2016 indicates the suspension of the processes of import substitution in Russia. According to experts, the recovery of imports is largely associated with the strengthening of the ruble. This is stated in the report “Monitoring the economic situation in Russia. Trends and challenges for socio-economic development”.
The document was prepared by the expert team of the economic policy Institute, named Yegor Gaidar (Gaidar Institute), Russian Academy of national economy and state service under the President of the Russian Federation (Ranepa), Russian foreign trade Academy (VAVT), Ministry of economic development, in partnership with the Association of innovative regions of Russia (AIRR).
“From January to September 2016, the real exchange rate of the ruble against the dollar, which reduced the ruble prices of imported goods and contributed to the transition to positive rates of growth of import of investment goods (both in value and in physical volume) to the end of the 1st half of 2016″, – stated in the text of the report.
Russian economists point out that with the 3rd quarter of 2014 4th quarter of 2015 has witnessed a gradual decline in the share of imported goods in turnover motor vehicles and components. However, the processes of import substitution in this segment stopped at the turn of the last and current years.
Simultaneously with the strengthening of the ruble began to rise and the share of imports in other product groups. However, if the share of imports in total trade turnover of machinery and equipment the whole preceding period stagnated around 30% since the beginning of the year, she also began to grow.
“Among the main factors that could contribute to the realization of Russia’s policy of import substitution include: a weakening of the national currency; the imposition of restrictions on the tradability of goods associated with the use of sanctions and counter-sanctions; implementation of a focused economic policy of the authorities,” write the authors of the document.
They refer to statistics in 2015, which suggests that the implementation of the import substitution potential was low, new opportunities could only use some in the industry.
The strengthening of the ruble, which was observed from the 1st to the 3rd quarters of this year, was one of the factors for the suspension of the processes of import substitution. In fact, to fix the temporary “success of import substitution” failed: the short-term advantage gained by a number of industries from the fall of the ruble and the imposition of sanctions and counter-sanctions, has not been matched by transformations which would be the basis for sustainable growth in the medium to long term, say the experts.
The program of import substitution in Russia began to carry out in connection with the sanctions imposed by Western countries against Russia over the Crimea and the retaliatory embargo of the Russian side on deliveries of products from the EU, USA and other countries.
Moody’s analysts in August 2015, said that imports into Russia are not replaced, and the Russian production can not compensate for the lack of foreign goods. The growth of domestic production in Russia since the beginning of 2015 does not cover the reduction of imports mentioned in the study. The only sector, which, according to the Moody’s review, import substitution has influenced positively the food industry.
In April of this year experts of the Ranepa, said that the Russian counter-sanctions had almost no effect on the economy of EU countries, USA, Canada and Australia. The total volume of food exports in the valuation decreased by 7%, and in the end, it was redirected to other countries.
The authors of the report added, however, that a reduction in food imports could be offset by development of domestic production. However, experts believe that the barrier for this was the decline in the working age population in General and labour force in rural areas in particular.