Russia’s invasion of Ukraine is likely to affect global trade in the coming months. Increased sanctions against trade with Russia and difficulties in financial transactions will disrupt and redirect trade in forestry products worldwide.
As a result, transactions with Russia will likely be reduced, affecting long-established international trade flows in forest products.
Countries such as China and India, which have reluctantly supported Russia in the conflict, may also be affected by limited trade sanctions.
This development would particularly affect China, which relies on imports of forest products from North America, Europe, Oceania, and Latin America for domestic use.
These regions of the world are considering extending sanctions to Russia and countries that directly or indirectly support Russia’s attack on Ukraine.
Likewise, governments in North America and Europe are seriously considering blocking Russia from the international SWIFT currency transaction system. Therefore, if this happens, Russian companies will find it difficult to trade with the world.
Russia, the world’s largest forestry products exporter
Russian exports of forest products were valued at more than $12 billion in 2021, and imports of paper products (mainly) are valued at about $2 billion, according to Wood Resource Quarterly.
Such figures place Russia as the largest exporter of timber globally and the seventh largest exporter of forestry products worldwide.
Russian forestry industry has increased rapidly over the past five years, led by softwood lumber and paper products.
The country has vastly underutilized forest resources and has the potential to increase timber harvests to supply its domestic industry.
In order to meet the growing global demand for forest products, the Russian government has recently launched programs to encourage investment in the sector, both to expand and modernize facilities.
However, many investment projects in Russia’s forestry products manufacturing sector are likely to come to a halt as the growing list of sanctions and restrictions on financial transactions come into effect.
Source: Wood Resources International LLC (2022)