Korean Exports to Russia Have Collapsed
More evidence on the impact of the sanctions so far.
This is a quick update to the note I published last week on how to understand the sanctions imposed on Russia.
On April 25, South Korea’s statistical agency just published its initial estimates of imports and exports by country for the month of March. Exports to all trading partners jumped from $54-$55 billion a month in January and February to $64 billion in March.
But the picture looks a bit different when focusing on Korea’s exports to Russia, which have plunged about 62% relative to the pre-invasion average.
In the past, Korean exports to Russia were linked to the international prices of Russia’s energy exports. When Russians were deprived of hard currency, they were forced to cut back on import spending.
That’s not what is happening today. Instead, Russians are suffering from an embargo imposed by the vast majority of the world’s productive centers. The sanctions have made it extremely difficult to sell anything of value to Russian (and Belarusian) buyers irrespective of how much they can theoretically afford to pay based on their revenues from selling oil, gas, and other commodities. As I noted last week, China’s exports to Russia were surprisingly low in March relative to their import spending. The latest data from Korea are even more extreme.
We’ll be getting March updates from Japan, the U.S., and Switzerland in the next couple of weeks, with the EU27 publishing their data towards the end of May.