Forecast of Export Potential of Russian Forestry Products in Postsanction Context

Abstract The analysis of the development prospects of Russia’s forest industry requires understanding the potential sales rates of its products in a new context. The method of handling this task suggested in this article relies on a retrospective analysis of open statistical data on foreign trade along Russia’s key routes of export supplies, specifically to China and the MENA countries.1 As shown by the analysis, the impossibility of redirecting the export of Russian forest products from the European market was conditioned by the basic features of the alternative markets. The import substitution strategy consistently implemented in China’s forest management and industry predetermines significant constraints on the room for further growth of foreign supplies to this major market for forest products. Because Chinese demand for forest products is highly price-inelastic, expanding supply drives prices down sharply enough to erode total revenue. As a result, any profitable expansion of Russian exports to China becomes impossible. The markets in the MENA region are ready to take additional product supplies; however, their capacity of doing so is limited and unlikely to improve in the coming years. As a consequence, it is unlikely that Russia will restore its forest product exports in the coming years by redistributing product flows among different geographic markets. In this context, forestry-development projects in Siberia and the Far East premised on overly optimistic assumptions about the Asian market should be viewed with considerable skepticism. This conclusion is yet another argument in favor of the need for radically reforming the forestry industry management model for developing the domestic market.