With sanctions against Russia increasing on a regular basis and with Russia's economy now heading toward a recession, one has to wonder if there could be an impact on Europe's rather weak economy since the two regions are economically interconnected.
Let's begin by looking at a chart that shows Europe's top trading partners from 2013:
As you can see, trade with Russia forms a rather important part of Europe's economy.
As a whole, Europe imports more from Russia than it exports to Russia, giving Europe a negative trade balance of €86.702 billion. In 2013, Russia was Europe's number 2 partner when it came to imports from Russia and Russia's number 4 partner when it came to exports from the EU. When imports and exports are summed, the total trade of €326.253 billion comprises 9.5 percent of total trade for the EU which totalled €3.419 trillion in 2013. Over the five year period from 2009 to 2013, EU imports from Russia grew at an average annual rate of 14.6 percent and exports to Russia from the EU grew at an average annual rate of 16.2 percent. This gives us a sense of how important trade is becoming between the two entities.
Here are some statistics showing what Europe imports from Russia (2013 data):
Industrial Products - €204.428 billion
Agricultural Products - €1.663 billion
Fishery Products - €386 million
Europe's industrial imports from Russia consist mainly of hydrocarbons (mineral fuels) of one sort or another which make up 77.8 percent of Russia's exports to Europe. Russia's exports of mineral products to Europe have grown from €89.63 billion in 2009 to €161.62 billion in 2013, a total five year increase of 80.3 percent.
Russia's industrial exports to Europe can be further broken down as follows:
Mineral fuels, lubricants and related materials - €160.589 billion
Manufactured Goods Classified by Material - €12.329 billion
Chemicals and Related Products - €6.266 billion
Base Metals - €8.3 billion
Pearls and Precious Metals - €3.218 billion
Here are some statistics showing what Europe exports to Russia (2013 data):
Industrial Products - €107.72 billion
Agricultural Products - €11.844 billion
Fishery Products - €211 million
Europe's industrial exports to Russia can be further broken down as follows:
Machinery and Transport Equipment - €56.705 billion
Chemicals and Related Products - €20.153 billion
Miscellaneous Manufactured Articles - €14.920 billion
Manufactured Goods Classified by Material - €12.584 billion
Food and Live Animals - €8.757 billion
Europe's industrial exports to Russia consist of a wide variety of items but 47.3 percent of the total consists of machinery and transport equipment. It is interesting to note that Russia imported €14.828 billion worth of automotive products from the EU in 2013 and €8.432 billion worth of pharmaceuticals.
Here is a graph showing the total trade flows between the two regions from 2004 to 2013:
As you can see, exports and imports between the EU and Russia have grown substantially since the depths of the Great Recession in 2009 with the two economies being very important to each other.
Let's close by looking at Europe's economy growth track record over the past eight years:
The last time that Europe saw a real growth level that could be considered "normal" was way back in 2007. Since the end of the Great Recession in 2009, Europe's economy has grown at an average annual rate of only 0.8 percent. Obviously, with pitiful growth like that, Europe's economy is highly vulnerable to negative outside pressures.
While the political leadership in some nations (that's you, Stephen Harper) are rubbing their hands together with glee at the prospect of Russia sliding further into an economic contraction because of the imposition of international sanctions, with Russia's economy being so interconnected with Europe's, when Russia catches an "economic influenza", it is certain to have a detrimental impact on Europe's very shaky economy as well and we all know how what happens in Europe, tends to float westward across the Atlantic Ocean.