Putin touts trade bump with global south at 'Russia's Davos'

Showcasing his economy’s resilience despite moves to isolate it, Russia’s president was keen to attract potential trade allies at an important conference in St Petersburg.

Russia’s determination to defy the West’s sanctions was on display at its Davos equivalent in St. Petersburg, with President Vladimir Putin looking South and East for partnerships.
Axel Rangel Garcia_AFP_Reuters
Russia’s determination to defy the West’s sanctions was on display at its Davos equivalent in St. Petersburg, with President Vladimir Putin looking South and East for partnerships.

Putin touts trade bump with global south at 'Russia's Davos'

Russia’s determination to defy the West’s sanctions was on display at its Davos equivalent in St. Petersburg, with President Vladimir Putin looking South and East for partnerships. He was speaking at the city’s 27th International Economic Forum—one of the biggest economic events held since its invasion of Ukraine—and his message was that Russia had not been sidelined or isolated, as Europe and the United States had hoped.

Russia’s economy has not only survived the sanctions but flourished despite them. Its central bank now has inflation under control at around 8%. This had been a worry since a lack of labour (owing to military call-ups) had sent wages spiralling. Furthermore, GDP is now growing at 5.4%, according to figures released on Friday. Russians have money in the banks, and with the value of the rouble on the rise, the cost of imports is coming down.

“Despite all the obstacles we are facing and the illegitimate sanctions imposed against us, Russia remains one of the key participants in global trade and is rapidly expanding the new logistics and geography of cooperation,” Putin said. Between 2020-23, he told delegates that Russia’s business ties to Latin America had grown by 42%, Asia by 60%, Africa by 69%, and the Middle East by 100%.

From Russia, with love

The forum, which draws participants from 100 countries, first ran in 1997 and is known informally as ‘the Russian Davos,’ a reference to the World Economic Forum held annually in the Swiss resort. This year, Putin wanted to show the world that Russia was doing well economically and woo Asia and the global south into new partnerships.

The goals and objectives of Russia’s new economic cycle were covered at the forum, with national priorities often referred to as “traditional values”, but the ambition of the gathering ran beyond national borders. Much attention was given to the development of a multipolar global economy, in which Russia is hoping to play a major role through new partnerships with countries in Asia, Africa, and South America.

Russia's President Vladimir Putin, right, welcomes Zimbabwe President Emmerson Mnangagwa for the talks on the sidelines of the St. Petersburg International Economic Forum in St. Petersburg, Russia, Thursday, June 6, 2024.

Business dialogue sessions between representatives, policymakers, and business group lobbyists from Russia, China, India, Africa, Latin America, and the Association of Southeast Asian Nations (ASEAN). Other sessions covered Russia’s relations with Azerbaijan, the United Arab Emirates, and Oman.

Yusif Abdullayev, director of Azerbaijan’s Export and Investment Promotion Agency, said there were 1,300 Russian-Azerbaijani joint ventures in his country. Elsewhere, delegates heard that Russia’s trade with Oman is up by 60% in 2023.

“We see how confidently Oman is developing, how its economy is growing, and its citizens’ wellbeing is improving, as well as demands for external trade contacts and joint investments,” said Russian economy minister Maksim Reshetnikov.

“Moreover, we see Oman as a wonderful entry point for the (Arabian) Gulf countries, which are estimated as a market of more than $2tn.”

Signs of strength

The World Bank recently estimated that Russia was now the fourth largest economy by purchasing power parity in the world, overtaking Germany at the end of 2023, something that several Russian speakers were keen to point out. Andrey Makarov, chair of the Russian parliamentary committee on budgets and tax, said Russia was ahead, having set its sights on overtaking Germany by 2025.

Despite the illegitimate sanctions imposed against us, Russia remains one of the key participants in global trade and is rapidly expanding.

Russian President Vladimir Putin

Elvira Nabiullina, governor of Russia's central bank, highlighted its macroeconomic stability, the growth of a retail investor class, and the development of instruments that allow financial resilience during crises.

"In 2018, we had around 100,000 people invested in the market," she said. "Now we have around 3.8 million. The percentage of our own citizens in the investment pool has gone up several-fold."

Deputy Trade Minister Albert Karimov described the Russian automotive sector as experiencing a year of crisis and challenge in 2022, which will be followed by a year of recovery in 2023.

"Based on figures from January to May 2024, we have seen a year-on-year growth in the internal market for new automobiles of almost 70%, with around 800,000 vehicles sold," he said. "We are slightly ahead of the forecasts."

Seizing opportunities

The exit of major food brands following Western sanctions let new local players step up, said Oleg Paroev of Vkusno-i-Tochka, which replaced McDonald's. "We have more than 2 million visitors a day and serve more than 40,000 tonnes of beef a year."

He added the firm was working with Russian farmers to cater to Muslims by increasing the supply of halal meat. "We are expanding into territories that have a predominantly Muslim population, and they have these requirements," he said.

During a session on tech entrepreneurship, Trade Minister Anton Alikhanov said his focus was on developing the raw materials industry that serves the microelectronics and chip development sectors. While praising Russia's self-driving technology, he also pointed to a dearth of talent in the tech industry, saying 250,000 additional professionals were needed. It highlighted how so many young Russians left the country to avoid being drafted into the army.

Other sessions covered Russia's potential new industries, including wine. Delegates heard that its southern regions have a favourable climate, but the culture and psychology of the south would need to adapt to the idea.

A man wearing a shirt with a portrait of Russian President Vladimir Putin and a sign in Russian reading 'Invincible' walks at the St. Petersburg International Economic Forum in St.Petersburg, Russia, on Thursday, June 6, 2024.

A multipolar world

A key theme was the shift towards multipolarity, and attention was given to the recently expanded BRICS+ bloc. Russia, China, India, and Brazil were among the four original fast-growing emerging markets. Russia's trade with the rest of the group was up by 27.8% year-on-year in 2023 before new members joined in January of this year. Imports were up 38.4%, and exports were up 20.6%.

Among the new members is Egypt, whose Economy Minister Hala Helmy El-Said highlighted the group's importance when referencing the multiple global crises and shocks of recent years.

"The BRICS bloc contributes to more than 28% of global GDP, consists of 42% of the world's population, and its share in global exports exceeds 20%," she said,

Each member has its strengths, and delegates agreed. Brazil is a major agricultural economy, India and China have strong labour markets and industries, while Russia can feed and fuel much of the world with its vast resources.

Sergey Kulakov/REUTERS
Russia's Deputy Prime Minister Alexander Novak and Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman attend a St. Petersburg International Economic Forum (SPIEF) session in Saint Petersburg, Russia, June 6, 2024.

Oil and the environment

Haitham Al Ghais, OPEC secretary-general, said oil demand was growing at 2.2 million barrels per day but noted "under-investment that industry has been facing, due to the pushing of certain ideologically-driven, politically-driven agendas".

Al Ghais forecast that global oil demand would double between 2024-45 as the global population increased to 9.5 billion people. These growing populations demanding oil would be "in the non-OECD developing countries," he added.

The forum covered environmental issues, including water conservation and recycling, while Narumon Pinyosinwat, an advisor to the Thai prime minister, focused on green financing and her country's experience with it.

"Several companies have come to Thailand turn agricultural waste into something very valuable" such as bioplastics and frames of industrial strength, she said, adding that Thailand's message was: "We are fully open for Russia to work with us."

It echoed Putin's own hands-out approach. "We are open to the broadest possible cooperation with all interested partners, including foreign companies, countries, and integration associations," he said.

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