Moldova s exports to Russia: Sectorial exposure

Transcription

1 Policy Briefing Series [PB/10/2014] Moldova s exports to Russia: Sectorial exposure Woldemar Walter & Jörg Radeke German Economic Team Moldova Berlin/Chişinău, July 2014 German Economic Team Moldova

2 Background Russia is an important export market for the Moldovan economy With the signing of the DCFTA on 27 th June 2014 there is a high risk for further trade disruptions in the near future To assess the actual exposure to the Russian market it is important to quantify the exposure of the different sectors of the Moldovan economy to the Russian market German Economic Team Moldova 2

3 Moldova`s exposure to the Russian market Exports to Russia as % of GDP Lithuania Ukraine 8,3% Moldova 8,0% Estonia 7,4% Latvia 7,3% Germany 1,2% EU 0,8% Source: Moody`s (2014), National Statistics Bureau Moldova 13,4% On national level the importance of the Russian market is significant Compared to Moldova's GDP exports to Russia were 8.0% in 2013 Dependency on the Russian market is comparable to Ukraine and Estonia but lower than Lithuania s However, since GDP is a value added indicator it is better to compare exports to production value On this measure exports to Russia account to 4.4% of production value of the Moldovan economy Result: Dependency high but not critical at national level German Economic Team Moldova 3

4 The role of re-exports Moldova`s merchandise Exports to Russia USD m Gross exports (lhs) Of which re-exports (lhs) Share gross exports in total exports (rhs) Source: National Bureau of Statistics, UN ComTrade % Russia is historically an important destination for exports; goods worth USD 630 m were exported to Russia last year Share of total exports increased from 17% in 2003 to 30% in 2012 before falling last year on the back of a slowing Russian economy and first trade restrictions However, increase mainly due to increasing reexports, i.e. exports of imported goods without noticeable value added, often goods which are only transported through Moldova Re-exports reached almost USD 400 m in % of total exports Re-exports do generate much less additional employment and value added than normal exports, because they do not include intense processing activities Therefore, further analysis of exposure focus on exports excluding re-exports German Economic Team Moldova 4

5 Sectorial exposure to the Russian market % Share of output exported to Russia (excluding re-exports, 2012) Source: Authors calculation based on National Statistics Bureau and UN ComTrade data Sectorial exposure shows how much output of a defined sector is exported to Russia Sectors with a high exposure are therefore vulnerable for Russian import restrictions Overall, excluding re-exports, 1.7% of output of the economy was exported to Russia last year However, exposure is very unevenly distributed among individual sectors Technical precision equipment with 24% of output sold in Russia is very exposed Beverages and spirits (mostly wine) with exposure of 20% already affected by restrictions Processed vegetable products (14%) also high exposure Agriculture overall with 5% exposure only moderately affected German Economic Team Moldova 5

6 Exposure of agricultural products to the Russian market Share of output exported to Russia of the 20 most important agricultural products (excluding re-exports, 2012) % Overall exposure of agriculture sector with 5% of output sold in Russia seems to be low However, some agricultural products rely solely on the Russian export market (see our PB/05/2014) Striking is the high dependency of apples with 50% of output sold in Russia Plums and sloes (43%) and table grapes (35%) are also very exposed to any Russian trade restrictions So is beef meat (30%) which has recently become the subject of trade restrictions Source: Authors calculation based on UN ComTrade and FAO data Conclusion: While the overall exposure of the agriculture and food sector is low, some products are extremely vulnerable German Economic Team Moldova 6

7 Economic importance of sectors with high exposure A high share of output exported to Russia is problematic for the affected sectors and companies However, high exposure is only problematic for stability of the whole economy when the affected sector contributes significantly to the overall economy Therefore need to assess if sectors with high exposure to Russian market also have high economic importance (see chart next slide) Beverages for example contributed USD 300 m to the economy in 2012 with 20% of its output accounted for by exports to Russia (note: wine is already affected by an import ban since 2013) Meat (which also has been restricted) has also a high exposure (10%) and high economic importance with output of around USD 205 m in 2012 Other vulnerable sectors are: technical precision apparatus, machinery, mineral products and processed vegetable products Result: Should Russia proceed increasing import restrictions against Moldovan products there are only a number of sectors that are both vulnerable and of high economic importance. Those should get a particular focus when drafting mitigating and support measures. German Economic Team Moldova 7

8 Economic importance (production value) Economic importance and exposure by sectors Printing industry 0 Ceramic products USD m Processed animal products Plastics & Rubber Articles of stone etc. Textiles Apparel Glass products Wood articles Articles of leather Agriculture (USD 1,707 m) Sugar & confectionery Chemical products. Furniture etc. Base metals & articles Paper and Paperboard Footwear Tobacco products Processed vegetable products Mineral products Beverages & spirits (USD 306 m) Machinery Technical precision apparatus Table grapes Plums and sloes % Exposure (share of output resulting from exports to Russia) Note: Calculations for exposure exclude re-exports, data for 2012 = Sector = Agricultural product Meat (including beef) Apples (50%) German Economic Team Moldova 8 Beef

9 Conclusions The overall exposure of the Moldovan economy to the Russian market is significant but not dominating, especially since a high share of exports to Russia are re-exports of imported goods without much value added However, there are large fluctuations across individual sectors of the economy While the overall exposure of agriculture sector is low, some individual agriculture and food products rely to a large extent on the Russian market Moldovan authorities should continue their efforts to normalise trade relations with Russia At the same time, contingency planning should be developed at government and company level in order to re-orientate exports from Russia to other destinations Support measures should focus on those sectors that are both exposed to the Russian market (i.e. a high share of output is exported to Russia) and also have a significant economic contribution German Economic Team Moldova 9

10 Appendix German Economic Team Moldova 10

11 Industrial sectors: Exposure and production value Exports (excluding re-exports) to the Russian market as % of production value Production value, USD m Technical precision apparatus Beverages and spirits Machinery Mineral products Processed vegetable products Tobacco products Base metals and articles Footwear Paper and paperboard Agriculture , Furniture etc Sugar and confectionery Chemical products Glass products Textiles Articles of leather Apparel Wood articles Plastics and Rubber Processed animal products Printing industry Articles of stone, cement etc Ceramic products Source: Authors calculation based on National Bureau of Statistics and UN ComTrade data Note: Calculations for exposure exclude re-exports, data for 2012 German Economic Team Moldova 11

12 Most important agricultural products: Exposure and quantity Exports (excluding re-exports) to the Russian market as % of production quantity Produced quantity, tons Apples ,849 Plums and sloes ,309 Table grapes ,802 Beef ,766 Cherries ,644 Potatoes ,033 Tomatoes ,523 Walnuts ,062 Onions ,239 Sunflower seed ,172 Maize ,397 Milk ,558 Pork ,536 Wheat ,231 Chicken meat ,124 Chicken eggs ,800 Sugar beet ,019 Rapeseed ,920 Soybeans ,227 Barley ,864 Source: Authors calculation based on UN ComTrade and FAO data Note: Calculations for exposure exclude re-exports, data for 2012 German Economic Team Moldova 12

13 Contact Jörg Radeke BE Berlin Economics GmbH Schillerstr. 59, D Berlin Tel: / Fax: / Follow us on German Economic Team Moldova 13