Since February 2022, Russia has been at the centre of world politics. The outbreak of the Russian-Ukrainian war and the economic and social situation of the two countries engaged in armed conflict are on the agenda of the world press and international organisations almost every day. Russia’s foreign economic situation has changed significantly over the past three years: due to European Union and international sanctions, its exports to most European countries have declined, and China and India have become the largest buyers of its energy resources. The previously dynamic exchange of goods has also become more varied in relation to Hungary. In our analysis, in addition to assessing the current situation of the Russian economy, we review Hungarian-Russian foreign trade relations from 2020 to the present day.
The situation of the Russian economy between 2019 and 2024
Since the annexation of the Crimean Peninsula in 2014, Russia has been under continuous economic sanctions, most of which have been imposed by the European Union. As the most populous and geographically largest country in Eastern Europe, it has extensive trade relations with most European countries, as well as with the states of the post-Soviet region. However, these relations have lost their previous dynamism in recent years as a result of the sanctions, which is also reflected in foreign trade and other economic indicators. Russia’s most important export items are energy sources (oil and natural gas), whose exports to the countries of the indicated region have been gradually declining since 2022.
Figure 1: Changes in selected Russian macroeconomic indicators between 2019 and 2024, supplemented with a forecast for 2025 (expressed in percentage).
The 2020 coronavirus pandemic caused a significant downturn in the Russian economy too: real GDP fell by 2.7% in the year of the pandemic, but inflation did not rise significantly until a year later, reaching 8.4% (IMF, 2025). Due to various government interventions, public debt as a percentage of GDP also began to rise in 2020, increasing by 5.5% compared to the previous year, but this was successfully consolidated over the following two years. From 2021, as in most European countries, Russia also began to experience an economic rebound, achieving real GDP growth of 5.9%. However, due to the events of February 2022, economic performance was -1.4% and inflation reached 11.9% (IMF, 2025). Rising government spending began to widen the ratio of public debt to GDP again, reaching 18.5% in 2022, 19.5% in 2023 and 20.3% in 2024 (IMF, 2025). Current forecasts indicate that, barring any major changes in the Russian-Ukrainian war or the global economy as a whole, real GDP could grow by 1.5% this year, while inflation will be brought down to 8.2%.
Figure 2: Change in the value of Russian foreign trade in goods between 2019 and 2024 (in millions of USD). Source of data: OEC World, 2025. The 2024 data are preliminary.
Foreign trade, and in particular the export of energy resources, is of great importance to Russia. Russian energy exports account for 14-15% of the country’s GDP, so a significant decline in them clearly has an impact on the country’s economic growth prospects. In 2019, the last year in which neither the coronavirus pandemic nor the war had an impact on foreign trade, crude oil accounted for 29.4% of Russian exports and refined petroleum products for 18% (OEC World, 2025). The largest buyers of both export products were EU countries, Turkey, China, South Korea and the US (OEC World, 2025). In 2020, the value of Russian goods exports fell to a record low, accompanied by a decline in energy purchases, with the effects of the pandemic behind this contraction. Exports began to grow again in 2021, and in 2022 the value of Russian exports became exceptionally high. In that year, total Russian exports of goods reached USD 537 billion, of which USD 343.6 billion was accounted for by crude and refined oil, fuel and coal briquettes (OEC World, 2025). However, by then, it was no longer European countries that were among the most important export destinations, but China and India. In 2022, 28.82% of total Russian exports went to these two countries, with energy sources accounting for a significant proportion of the goods. Due to international and European Union sanctions, EU member states reduced their imports of Russian energy sources, but the restrictions also extended to the Russian defence industry, banking sector, mechanical engineering and other important sectors (KKM, 2025). As a result, foreign trade values also declined in 2023, but exports and Russian imports began to grow again from 2024.
Figure 3: Change in the value of FDI flows in Russia between 2019 and 2024 (at current prices, in millions of USD).
Although the sanctions did not sufficiently break the Russian economy, they did cause a significant decline in certain areas. These include Russian foreign direct investment (FDI) outflows and foreign capital inflows into the country. Before the outbreak of the war, Russia attracted capital at a relatively low level compared to its economic potential and territory: between 2019 and 2021, the average annual value of FDI inflows was USD 27,042 million (UNCTAD, 2025). The main investor countries included EU member states, China and the US (UNCTAD, 2025). The level of outward capital investment shows a similar trend, but in 2021, the value of Russian capital investments abroad was exceptionally high: acquisitions in other countries amounted to USD 64,072 million in that year alone (UNCTAD, 2025). This figure is also remarkable compared to the previous year’s data, so given that the large-scale outward capital investment took place in the last year of peace before the war, the question arises as to whether there was a capital flight on the part of companies and state actors. The main destinations for Russian capital exports are primarily offshore states, such as Cyprus, from where a significant amount of what is believed to be capital of foreign origin flows back to Russia.
The events of 2022 and the international sanctions adopted thereafter led to a significant amount of capital withdrawal from acquisitions previously made by foreign investors (UNCTAD, 2025a). In 2022, capital withdrawal amounted to USD -15,205 million on the FDI inflow side, while FDI flows from Russia amounted to USD 11,510 million (UNCTAD, 2025a). Capital withdrawals mainly came from foreign interests in the Russian energy sector, primarily in the oil and natural gas extraction sectors. According to the Russian central bank, foreign direct investment fell to its lowest level in 15 years, reaching USD 235 billion by October 2024: in the first three quarters of the year, foreign investors withdrew a further USD 44 billion, adding to the USD 80 billion in 2023 and USD 138 billion in 2022. Much of the decline was due to the withdrawal of Western companies (including those in the automotive and retail sectors) as a result of sanctions imposed in 2022 (UNCTAD, 2025a).
The Russian economy has faced a number of difficulties over the past five years, largely due to sanctions imposed because of the war. However, the economic downturn was nowhere near as severe as EU policymakers had initially expected. Although the vast majority of restrictions caused significant declines in capital flows, this is not reflected at all in foreign trade. Apart from the decline in foreign trade data for 2023, there are no signs of changes that have profoundly shaken the Russian economy. In some areas, Moscow does not even need sanctions to achieve record profits compared to previous years. One such area is fertiliser exports, which the EU has not imposed sanctions on, although the Commission has repeatedly called on member states to apply individual tariffs and quotas. Nevertheless, unprecedented quantities of Russian fertilisers have entered European markets in recent years, with countries such as Germany among the main buyers (Szigethy-Ambrus, 2025). The war and the accompanying sanctions have had a much greater impact on Russian domestic politics and social life than on the country’s economy. However, it is also important to note that the sustainability of growth is questionable, which will be most affected by the war dragging on. Current data are promising for the Russian economy, but they also carry the risk of running out of steam.
Changes in Hungarian-Russian foreign trade since 2020
Due to its geographical location and energy exposure, Hungary has maintained stable foreign relations with Russia for many decades. The relationship between the two countries is also strongly influenced by their historical past. Today, relations between the two countries are mainly shaped by the course of the war and international sanctions, but high-level meetings have also taken place between Moscow and Budapest in recent years. In addition to meetings at the level of prime ministers and foreign ministers, meetings of the Hungarian-Russian Intergovernmental Committee on Economic Cooperation (KKB) are held regularly. KKB meetings are usually held once a year, alternating between Hungary and Russia. The main tasks are as follows:
- developing bilateral economic relations,
- exploring new opportunities for further development of economic cooperation,
- developing proposals to improve the conditions for economic cooperation between organisations in the two countries (KKM, 2025).
There are numerous working groups operating within the framework of the KKB:
- Energy working group
- Industrial working group
- Construction working group
- Agricultural working group
- Health and healthcare working group
- Tourism working group
- Military technology working group
- Education working group
- Information and communication technology and innovation working group
- Working group on sport
- Cultural working group (KKM, 2025).
Economic cooperation is gradually expanding not only with Russia, but also with the Russian Federation. Hungary currently has economic cooperation agreements in place with 13 entities in Russia.
Figure 4: Changes in the value of Hungarian-Russian foreign trade between 2019 and 2024 (in millions of USD).
The Hungarian-Russian foreign trade is characterised by Russian surplus, which is primarily due to the high rate of Russian exports of energy resources. They accounted for 95.2% of Russian imports to Hungary in 2023, which also clearly shows how crucial the trade in energy sources is in the relationship between the two countries (OEC World, 2025). However, the value of Russian imports has been gradually declining since 2022. As mentioned in the previous section, Russian exports reached a record high in that year, reflecting the stockpiling of energy sources due to the war and international sanctions. However, afterwards the amount of Russian energy sources purchased by Hungary began to decline gradually, and so did the total value of Russian imports: in 2023, the value of Russian goods imported by Hungary was USD 6,190 million, and in 2024, according to the data available so far, it was USD 5,406 million (OEC World, KSH, 2025). As a result of the sanctions and the energy exposure caused by the war, Hungary has begun to diversify its sources of energy imports, so although Russia still ranks first on the list of supplier countries, Azerbaijan is also gaining an increasing share (OEC World, 2025). In 2019, Hungary imported only USD 10 million worth of crude oil from the Central Asian country, but by 2023, the value of its imports had increased more than fivefold to USD 54.3 million (OEC World, 2025). In addition, a cooperation agreement has also been concluded between Baku and Budapest on natural gas supply issues (Kormány, 2023).
Hungarian exports to Russia are significantly more diverse than the structure of imports to Hungary. Packaged medicines (25%) and special medical and pharmaceutical products (18.1%) feature prominently in Hungarian exports. Comparing the current product structure with that of 2019, it is clear that Hungarian exports of computer technology, vehicles and transport equipment had nearly disappeared by 2023. In 2019, computer products worth USD 747 million and vehicles and transport equipment worth USD 204 million were exported from Hungary to Russia (OEC World, 2025). These two product groups accounted for 42% of our total exports to Russia. As a result of the sanctions, the share of these two product groups in total Hungarian exports fell to only 11% in 2023 (OEC World, 2025). This also means that not only did Hungarian exports decline overall, but the country also lost a market that had previously been a significant buyer of Hungarian IT and automotive products. The role of intermediary countries – which purchase a given product and then resell it to the target country at a certain mark-up – becomes more important in this case from Russia’s point of view, as with their help it can circumvent sanctions and obtain the goods it previously purchased.
Direct capital flows in foreign trade relations between the two countries also show changes following the outbreak of the war in 2022.
Figure 5: Changes in FDI flows and stock in Hungary-Russia relations between 2019 and 2023 (in millions of euros).
Russia has not previously occupied a prominent position among the countries directing FDI to Hungary, but in recent years, especially in 2023, the value of Russian capital investments has increased significantly. Hungary is a popular investment destination for Russian capital investors for similar reasons as for Asian countries: its geographical location and EU membership mean that products manufactured here can be sold directly on the EU market. In addition, its developed infrastructure, financial system and political stability are further reasons why investors see it as an ideal destination for capital investment. According to MNB statistics, the value of Russian FDI in Hungary fell from HUF 470 billion to HUF 253 billion between 2010 and 2020. The events in Crimea in 2014 are behind this decline too, as the sanctions imposed at that time also contributed to the decline in capital investment over the past decade. Russian companies investing in Hungary are mainly interested in the commercial, nuclear energy and medical device manufacturing sectors (Komócsin, 2022).
The entry of large Hungarian companies into the Russian market is characterised by caution and restraint. Although the three flagship Hungarian companies – MOL, Richter and OTP – are present in the country, small and medium-sized enterprises rarely expand into Russia. Foreign companies can enter the Russian market in several ways: through direct sales, distribution sales, opening a commercial representation or branch office, or establishing a subsidiary (KKM, 2025). The rules and options for setting up a company are relatively simple: the most common form of business association is a limited liability company (KFT or OOO in Russian), with a minimum capital of RUB 10,000, approximately HUF 43,000. The company can be registered for a fee of RUB 4,000 (approximately HUF 17,400). The further administrative procedures are similar to those in Hungary. In addition to the large Hungarian companies already mentioned, there are also companies in Russia that manufacture medical prostheses and feed supplements, and provide construction services (Kalotay, 2022).
Following the events of 2022, more than a thousand Western companies indicated their intention to withdraw or suspend their operations in Russia. No such behaviour was observed on the part of Hungarian companies, nor did Russian companies present in Hungary take similar action (Kalotay, 2022). There were only two cases in which the cessation of operations by Russian companies affected Hungary. One was the closure of Sberbank’s Hungarian subsidiaries, which, however, ceased operations not because of sanctions but because of the bankruptcy of Sberbank’s Vienna headquarters. The sanctions affecting financial transactions naturally had an impact on the Vienna headquarters’ ability to operate, so the final decision affecting the Hungarian branches was not made independently by the local management. The other case was the disappearance of Lukoil petrol stations, which was due to the acquisition by MOL. The acquisition initiative was agreed by the parties in January 2022, before the outbreak of the war, so this was also not indirectly related to the sanctions (Kalotay, 2022).
The biggest challenge for Hungarian and other foreign companies remaining in the Russian market is currently the procurement of raw materials and maintaining financial relations at their previous level. Logistical issues were resolved relatively quickly by introducing alternative routes and means of transport, but this has had a significant impact on prices.
Overall, there have been no significant changes in Russian-Hungarian foreign trade relations in the three years since the war and in the last more than five years. Imports of energy products have decreased, but the nominal value of Russian imports in 2024 was higher than in 2019. The situation regarding foreign capital investments remains stable for both Hungarian and Russian companies, and the war has not led to any large-scale capital flight or withdrawal.
Summary, conclusion
Between 2019 and 2024, Russia performed better than expected in economic terms. Most forecasts made in connection with the 2022 war predicted that the country’s economic performance would suffer a significant decline in the short term and that the volume of exports could fall to an unprecedented level due to shrinking trade relations. Although exports from Russia did indeed decline significantly in 2023, the first year of the war, real GDP grew by 4.1% and inflation was reduced by almost half. All this did not indicate that Russia had been broken by the sanctions. If we look at the data from a year later, 2024, we can see that the main economic indicators are approaching the values from before 2022, that is, before the war. The economic restrictions therefore failed to live up to expectations, and Russia was able to restore its previous performance in one way or another. Nevertheless, the question remains as to how sustainable this growth can be, with most forecasts predicting that the Russian economy will run out of steam in the coming years. Foreign trade relations between Hungary and Russia have not suffered any major disruption as a result of the sanctions. Although the two countries have different views on the end of the war, this and other divergent foreign policy decisions do not imply any negative changes in foreign trade relations.
Sources
IMF (2025): https://www.imf.org/en/Countries/RUS
Kalotay Kálmán (2022): Túlélik-e a háborút a magyar cégek Oroszországban? In. G7 Holnap Oroszország nélkül sorozat. 2022. június. https://www.researchgate.net/publication/361532594_Tulelik-e_a_haborut_a_magyar_cegek_Oroszorszagban/citations
KKM (2025): Oroszország országismertető https://exporthungary.gov.hu/download/6/73/53000/Orosz2025.pdf
Komócsin Sándor (2022): Közel ezer ember állása függ a magyarországi orosz vállalatoktól. https://www.economx.hu/magyar-vallalatok/allas-magyarorszagi-orosz-vallalatok-haboru-szankcio.748808.html
Kormány.hu (2023): Egyetértési megállapodást írtak alá az azeri földgáz közép-európai szállításáról. https://kormany.hu/hirek/egyetertesi-megallapodast-irtak-ala-az-azeri-foldgaz-kozep-europai-szallitasarol
KSH (2025): 17.1.1.8. A külkereskedelmi termékforgalom értéke euróban és értékindexei a fontosabb országok szerint [folyó áron]. https://www.ksh.hu/stadat_files/kkr/hu/kkr0008.html
Magyar Nemzeti Bank (2025): FDI Statisztikák https://statisztika.mnb.hu/publikacios-temak/fizetesi-merleg-es-kapcsolodo-statisztikak/kozvetlentoke-befektetesek
OEC World (2025): Russia https://oec.world/en/profile/country/rus?selector345id=2019&selector343id=Export
OEC World (2025): Hungary https://oec.world/en/profile/country/hun?selector345id=2023&selector343id=Export
Szigethy-Ambrus Nikoletta (2025): A háború és a szankciók ellenére is növekszik az orosz műtrágya export. https://www.oeconomus.hu/oecoglobus/a-haboru-es-a-szankciok-ellenere-is-novekszik-az-orosz-mutragya-export/
UNCTAD (2025): Foreign direct investment: Inward and outward flows and stock, annual. https://unctadstat.unctad.org/datacentre/dataviewer/US.FdiFlowsStock
UNCTAD (2025a): World Investment Report 2025 – International investment in the digital economy – Country Fact Sheet: Russian Federation. https://unctad.org/system/files/non-official-document/wir_fs_ru_en.pdf
