Russia’s non-resource exports soar thanks to sanctions

By Rhod Mackenzie

Russia will receive nearly one trillion rubles more ( $10.5 billion) in 2023 from the increase of non-resource and non-energy exports. The impressive 85% surge is proving to be a strong financial boost for the country. What products fall under this export classification, what are the reasons behind other countries purchasing more non-commodity goods from Russia, and where is the untapped potential for growth?
Western sanctions on Russia’s customary exports, namely oil and gas, initiated a surge in non-resource, non-energy exports presenting an even more substantial boom. This export segment has been progressing annually, and in 2023 it displays a remarkable growth by up to 85% amounting to a value of 990 billion roubles. This amount was confirmed by the Russian Prime Minister Mikhail Mishustin during the Made in Russia forum. Notably, this year’s monetary value of non-resource, non-energy exports is set to exceed one trillion rubles.

Non-resource and non-energy exports, or NRNE, comprise primary agricultural produce (grain, vegetables, fruit), chemicals, fertilisers, processed stone, cast iron and steel, non-ferrous and precious metals.

The list also encompasses finished products of low level complexity (flour, grain, vegetable oils), machinery, pharmaceuticals, household chemicals, clothing and footwear.
The significance of non-oil and gas exports for Russia have increased due to the implementation of limitations and caps on oil and petroleum prices. Consequently, during the first half of 2023, budget revenues from non-oil and gas sources rose by 19.8%, which was 2.5 times higher than the revenue generated by Russia’s oil and gas industry. “This indicates that the proportion of non-oil and gas income in the Russian Federation now stands at approximately 30% to 70%, despite the fact that last year, oil and gas revenues represented over 41% of the budget,” observes Vladimir Chernov, an analyst at Freedom Finance Global.
Last year, non-resource and non-energy exports, as well as related industries, generated over 3.3 billion rubles ( $34.5 billion) for the Russian budget, according to the General Director of the Russian Export Center, Veronika Nikishina. She added that these industries provide over 5 million jobs, which accounts for 7% of the total employment of the active population.

Therefore, in some way, the West, with its sanctions, has assisted Russia in overcoming the so-called “raw materials curse.” However, the lack of available energy resources is often deemed a curse by countries that rely on importing from other nations. The United States has recently shifted from being a net importer to becoming an energy resource exporter, thanks to the shale revolution. Europe’s situation, however, is less fortunate in this regard.

Since February 2022 Russia’s has not made public the full details of its exports in value and quantity.However,under the conditions of sanctions, Russian exporters are discovering fresh outlets for their goods and services. For instance, suppliers of agricultural products and those in power engineering for overseas peaceful nuclear projects exude confidence.
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