Explanations for the large rebound in EU-Russia trade in 2017?

Question

The European Commission estimated the cost of sanctions [imposed on Russia] for the EU to €40bn (0.3 per cent of the EU GDP) in 2014 and €50bn (0.4 per cent of EU GDP) in 2015. In addition, it was anticipated that the Russian food ban would cost the EU €5bn (DG EPPD 2017, p. 11). [...]

It is between 2013 and 2016 that the major fall in EU’s export to Russia took place and it fell by 39.4 per cent or €47 billion. After 2016 export started to recover and the accumulative result 2013-2017 is a total fall in export to Russia of 16.6 per cent, or €17 billion. Thus just in one year 2016-2017, the EU recovered €30bn of its previous export losses (Eurostat 2018).

The source isn't really providing much insight why this rebound took place. As far as I know sanctions weren't dropped...

Throughout 2017 and 2018, the EU extended sanctions every six months against Russia, adding six entities involved in the construction of the bridge over the Kerch Strait between Russia and the Crimean Peninsula

So what explains the large rebound?

A German article assigned some of the rebound to the 2018 World Cup preparations, but it seems a little simplistic. The article from which I quoted the bit on sanction extension/maintenance does mentions some Italy-Russia deals on energy (Enel-Rosseti) being signed in this period, but it's unclear to me if these had any trade effect during 2017.

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Minor update: there's now data available for 2018 as well:

Answer 1

One reasonable explanation would be that the rise corresponds to a simple correction after an excessively large decline. However, there is another reason:

The image shows the development of Brent oil prices in about the same period. Source: TradingEconomics

Russian export volume is highly correlated with oil prices. And imports grow/decline with exports -even though not necessarily with each trading partner or without time lag.

P.S.: There is another good answer by @MaksimKhaitovich. However, I do not completely agree:

• I'm not convinced that the closure of nuclear or coal plants has driven Russian gas exports to Europe as the decline is mostly compensated by an increased share of renewable energy. The expected substitution of coal by liquefied natural gas didn't happen as the price of emission certificates under the ECTS had been too low (or the price of LNG too high) and the share of oil in electricity generation has always been low.
• About food production: Food imports haven't been negligibly small nor are they now. When I was in Moscow in 2014, I had been astonished how much food, even food that could easily be produced in Russia (e.g., Polish/German cucumbers), was imported from the EU. The newspapers showed that 80 per cent or more of meat was imported. Domestic food production has dramatically increased in the last few years. Still, in 2018 Russia imported food for 5.7 billion euros, which is equivalent to 6.7 per cent of Russian imports from the EU (Manufactured goods: 89.3 %).

Answer 2

Your question has several parts inside of it.

1) General growth of trade is happening due to acceleration of Russian economy growth. Basically, the economy has adapted and is now much more robust than before - hence the growth.

2) More specifically, trade with EU has two components - export from Russia and import into Russia from EU.

Export Russia exports a lot of natural resources, especially energy-related. We export gas (including LNG), oil and its subproducts, coal, electricity, nuclear fuel. Due to local changes EU closes a lot of nuclear plants, coal plants etc, forcing increased reliance on imported gas. Also EU is slowly losing its ability to mine gas within EU (issues with Groningen gas field, for example, force Netherlands to dramatically reduce output). All of it increases exports of gas from Russia. Price growth helps here as well.

Import Since 2014 Russia launched a set of massive national infrastructure projects - huge construction in Crimea, Nord Stream - 2, huge efforts in localization of manufacturing and IT systems etc. All of it requires to import some equipment, services and materials from EU leading to growth of import as well.

3) Effect of sanctions generally is negligible by now and mostly affects some of EU members. If you read what the sanctions actually mean: Russia blocks imports of agricultural goods from EU mostly - hence main damage is done to countries like Italy or Greece and France. Generally Russia localized most of the food production by now. But import of food from EU was negligible small anyway. EU on the other hand blocks sales of military equipment and some double-purpose technologies (which can be used in military) to Russia. If you think about it, Russia is second-largest weapon seller in the world, so effect of these sanctions is negligible as well. Some critical advanced technologies are banned for export (like composite materials) but value-wise their sales were always small.

Hope it helps. Overall, you don't need to be surprised. Politics and actual economy are two very different animals.