War in Ukraine causes Portuguese exports to Russia to fall by half

13-07-2022

It is mainly foodstuffs that companies continue to sell to the Russian market, such as fruit and vegetable preparations or cereal flakes, but also wine, textiles, wood, and footwear.

Portugal continues to sell its products to Russia, although in substantially lower quantities than usual. The Russian market, which in 2013 was worth more than 263 million euros for Portuguese companies, generated in the first five months of 2022, only 36.7 million euros, compared to 67.7 million euros in the same period in 2021. It is mainly food goods that the country continues to send to the region. 

The effect of the war in Ukraine is notorious in commercial transactions between the two countries: in the first two months of the year - remember that the invasion occurred on February 24 - Portuguese exports to the Russian Federation were growing 5.25% to 24.7 million euros. Now, three months later, the cumulative decline since the beginning of the year is 45.8%.

Among the exported products, highlight goes to foodstuffs, namely cereal products - cornflakes or other cereals in grain form, in the form of flakes or flour and semolina, pre-cooked or otherwise prepared - prepared or preserved tomatoes and vegetables also prepared or preserved. In the case of cereal preparations, purchases totaled almost 381 thousand euros, compared to almost 399 thousand euros in the first five months of 2021, but in the case of vegetable and fruit preparations, national exports even grew this year: since the beginning of the year, Portugal has sold more than 3.3 million euros of these products to Russia, an increase of 10%.

In addition, there are still those who continue to export wine, textiles and clothing, footwear and wood or wooden articles. The European Union has been imposing restrictions on Russian imports and exports, on a list "designed to maximize the negative impact of sanctions on the Russian economy, while limiting their consequences for businesses and citizens.

Excluded from these restrictions are consumer and health-related products, such as pharmaceutical items, food, and agricultural products, "in order not to harm the Russian population."

Exports to Ukraine were also affected by the situation, although their weight was much smaller. Portugal sold goods worth 35.7 million to Ukraine in 2021, almost 5 million more than the previous year (+16.3%). It was the highest value in the current millennium. In the first two months of this year, Portugal has already sent goods worth 5.6 million to Ukraine, up 15.8% year-on-year. Now, in the accumulated from January to May, the total drop is 33.6% to 8.971 million. The purchase of preparations based on cereals, flour, etc., grew 147% to 921 thousand euros.

These are data from the National Institute of Statistics, which yesterday released the external performance of the Portuguese economy in the first five months of the year: sales abroad grew 22.3% to 31,835 million euros, or 5813 million more than in the same period last year.

As for May's performance, INE highlights the effect of inflation, stressing that national exports soared 40.6% that month, in nominal terms, but that half of this variation results from price increases: 17.2% more year-on-year. In imports, the situation is even more remarkable, with a nominal growth of 46.4% and a price increase of 24.3%.

The trade balance of goods deficit worsened by 976 million euros, compared to May 2021, reaching 2421 million.

Spain remains the main trading partner, with exports increasing 32.3% and imports growing 39%. INE also highlights the 180% increase in exports to the US, with special emphasis on pharmaceutical products.