Russia GDP (IMF estimates, currency-basis)
2021 $1.7 trillion
2016 $1.3 trillion
2013 $2.3 trillion
2009 $1.3 trillion
Most economies “grow” incrementally and undramatically (with occasional incremental dips in recessions). Through productivity growth, investment, and slight rises in the populations of consumers and workers, they steadily add a couple of percentage points each year. The Russian economy looks different: More like an inflating and deflating bellows, nearly doubling in size from 2009 to 2013, then contracting by nearly half over the next three years, and since 2016 another burst of growth.
Why? The pattern reflects Russia’s exceptionally high dependence on energy production and energy sales. According to the WTO’s Trade Profiles 2021, an annual country-by-country summary of imports, exports, partners and balances for 197 countries, “fuels and mining products” accounted for 59% of Russian exports in 2020. This figure is quite large — among developed economies, only Norway’s is higher — and likely understates the actual role of energy in Russian trade. The WTO lists Russia’s top four exports in 2020 as:
Crude oil, $122 billion;
Refined petroleum products, $67 billion;
Coal, $16 billion; and
Natural gas, $10 billion.
These four products combine for $215 billion, or 65% of $332 billion in total Russian goods exports that year, with the “refined petroleum products” category, presumably including include some goods classified as manufactures rather than primary “fuels and mining” products. Overall, Russia was the world’s second-ranking exporter of these goods; the U.S. ranked second, but with energy making up a much smaller 15% of the U.S.’ $1.4 trillion in exports.
Two frequent consequences of this level of dependence on energy sales:
(1) Countries this reliant on energy and metal ore exports are economically volatile — they boom when world prices rise and crash when prices fall — unless they have especially sophisticated ways of banking excess resource rents in good years. Thus the odd pattern of Russian GDP. With large shares of GDP and government revenue coming through a small group of companies and individuals, they also frequently (though again not always) develop political systems centralized around a few government officials and top executives of state or quasi-private enterprises. The Russian examples are Gazprom, Rosneft, Lukoil, and a few similar organizations.
(2) Their customers need to diversify sources, so as to avoid reliance on potentially unstable partners. Paul Bledsoe examines this question in PPI’s most recent energy and climate paper, reviewing the implications of Western and Central European reliance on Russian natural gas for heating and electricity. He suggests an important place for the United States as an alternative source for European energy needs:
“New sources of gas, including liquefied natural gas (LNG) imports from the United States and other clean sources, can reduce the EU’s reliance on methane-heavy Russian gas. But of course, that will require the United States and other exporters to drive down methane and carbon dioxide emissions from the lifecycle as close to zero as possible, and verify their reductions with credible methodologies. Moreover, the geopolitical costs of Russian gas continue to plague the EU broadly, and Ukraine and other Eastern European nations specifically. EU imports of Russian gas have actually increased since Moscow’s illegal annexation of the Crimea in 2015. Over time, limiting Russian gas imports thus could diminish its political leverage over Europe while also helping the EU achieve its climate goals.”
Read PPI’s Bledsoe on natural gas, Atlantic economics, and European security here.
And read this from PPI President Will Marshall on the Biden administration, Putinist threats, and re-anchoring American foreign policy in liberal and democratic values.
Data
The World Bank’s Russia Economic Report can be found here.
The WTO’s World Trade Profiles has exports/imports/partners by country for 197 economies can be found here.
Background reading
Anna Politkovskaya’s essay collection “Putin’s Russia: Life in a Failing Democracy,” on Russian life and politics circa 2005:
The State Department’s European and Eurasian Affairs Bureau can be found here.
The European Union is Russia’s main trading partner, buying 41% of Russian exports and providing 34% of Russian imports in 2020. Read about the EU’s Moscow mission.
The Ukrainian Embassy in D.C., can be found here.
Read about Russian gas giant Gazprom.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
