Russia Achieves 'Record Trade Surplus'... "Sanctions on Russia Helped Putin Cover War Expenses"

Most Oil and Gas Exports Allowed as Before Despite Sanctions
Profits Increase Further Amid Soaring Energy Prices

Russian President Vladimir Putin, who is leading the invasion war of Ukraine, met with Mahmud Ali Kalimatov, the head of the Republic of Ingushetia, at the Moscow Kremlin on March 30 (local time).
[Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] An analysis has emerged that Russia, facing high-intensity economic sanctions from the West due to its invasion of Ukraine, has posted a record trade surplus.

On the 13th (local time), the British weekly news magazine The Economist reported, "Russia is achieving a record trade surplus as imports have decreased while exports have been maintained." According to the media's analysis, since the invasion of Ukraine on February 24, Russia's export value increased by 8% compared to the same period last year, while imports decreased by 44%.

Although Russia recently stopped publishing monthly trade statistics, the media estimated this based on statistics from Russia's eight major trading partners. In fact, last month, China's exports to Russia decreased by about one-quarter compared to the same period last year, while imports increased by 56%. Germany, a major trading partner, saw exports to Russia drop by 62% monthly, while imports decreased by 3%. The Economist analyzed that Russia currently earns $1 billion (about 1.3 trillion won) per day from energy exports.

Russia's import value sharply declined due to increased economic uncertainty caused by international sanctions such as the expulsion of major Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment network, and reduced purchasing power for Western goods. Logistics difficulties also exacerbated this situation. On the other hand, exports were maintained because most oil and gas exports were allowed despite sanctions. Additionally, profits increased further due to the surge in energy prices such as international oil prices.

Experts have also predicted that Russia's surplus will increase further. The Institute of International Finance (IIF) expects Russia's trade surplus this year to be $250 billion, more than double last year's $120 billion. Klaus Vistisen of the consulting firm Pantheon Macroeconomics pointed out, "Sanctions against Russia have rather increased the trade surplus, helping to cover war costs."

Liam Peach of economic analysis firm Capital Economics said, "Even if an embargo on Russian oil is implemented, because it is phased in gradually, imports may only decrease by 19% this year," adding, "The full effect of sanctions will be felt by early next year, by which time President Putin will have accumulated tens of billions of dollars in war funds."