Current account of Russia

Main article: Russian economy

2024

High surplus of $40 billion amid import problems due to Western sanctions on payments

The current account surplus in Russia remains at a high level in the first half of 2024.

Unlike 2023, the disposition on the balance of payments of Russia in 2024 is very stable. The STO surplus amounted to $40.6 billion vs $23.3 billion per 1P23, and for 2Q24 - $18 billion vs $7.7 billion a year earlier.

Excluding the abnormal 2022 and crisis 2020, by historical standards, the STO surplus of $40 billion for the first half of the year is a strong result, because in 1P21 - $39.7 billion, 1P19 - $44.1 billion, and in 2017-2019 an average of $38.5 billion, i.e. the result of the 1P24 is quite consistent with the average pre-crisis indicators.

The secret of the stability of the foreign exchange market of the Russian Federation and the ruble exchange rate is very simple, Spydell Finance wrote. By historical standards, there is a high STO surplus, a record return of foreign exchange earnings, a decrease in the intensity of external debt repayment, a decrease in the intensity of toxic/excessive capital outflow typical in 2022 and the first half of 2023, plus balancing operations of the Bank of Russia in the foreign exchange market.

And what was the reason for the high surplus of the service station?

• Exports of goods and services decreased by only 1.3% YoY and amounted to 225.7 billion in 1P24 vs 228.7 billion in 1P23, where for 2q24 - $114.7 billion vs $115 billion in 2q23.

• Imports of goods and services decreased by 7.3% YoY to $174.7 billion vs $188.4 billion, where in 2q24 the decrease was 6.4% YoY - $90.2 billion vs $96.4 billion a year earlier.

• The trade surplus for goods and services amounted to $51 billion in 1P24 vs $40.3 billion in 1P23, where 2q24 - $24.5 billion vs 2q23 - $17.4 billion.

• The balance of primary and secondary income improved to a deficit of 10.4 billion in 1P24 vs a deficit of 17 billion in 1P23.

Official statistics show that there are really problems with imports and this is not connected with the solvency crisis, as in 2015-2016 or in mid-2022, when the devaluation of the ruble led to a decrease in the purchasing power of income and savings.

Now incomes and savings are growing faster than the rate of devaluation of the ruble, and import problems are due to restrictions on calculations and stronger export controls due to pressure from the United States and allies.

Doubling of the service station surplus in the first 4 months to $31.7

The current account surplus in Russia almost doubled at the beginning of 2024 compared to 2023.

For January-April 24, the service station surplus amounted to $31.7 billion vs $15.5 billion. Excluding the abnormal 2022, the STO surplus in 2024 is comparable to the average indicators in 2015-2021 for the same period of time, the result is good.

At the same time, not the entire surplus of the service station is available for use due to sanctions.

How did you achieve a high surplus (the surplus improved by 16.1 billion over the year)?

• 6 billion out of 16.1 billion ensured an improvement in the balance of primary and secondary income, which is mainly due to the attenuation of foreign economic investment activity, both to Russia and outside.

• 3.6 billion - improving the balance of services, where exports increased by 1.2 billion, and imports of services decreased by 2.4 billion.

• 6.5 billion - an improvement in the trade balance for goods, where exports decreased by 3.1 billion, but this was offset by a more significant reduction in imports by 9.6 billion.

What is the structure of capital outflow?

• The decrease in the intensity of repayment of obligations is a decrease of 3.6 billion in January-April 24 vs a decrease of 8.3 billion a year earlier.

• Net errors and omissions in 2024 amounted to -0.9 billion in the outflow of vs -3.6 billion in 2023 in the first 4 months, which indicates an increase in the transparency of cross-border operations - a positive trend.

• The decline in ZVR amounted to 4.9 billion in 2024 vs a decrease of 5.9 billion in 2023.

• Net acquisition of financial assets rose sharply to 32.2 billion vs 9.5 billion - probably a significant part of these are trade loans and receivables, and not the withdrawal of capital from Russia, since such volumes were not noticed within the Russian currency system.

Surplus of $13.4 billion in March - a record from December 2022

The current account surplus of Russia for March 2024 amounted to + $13.4 billion, which is the largest indicator since December 2022, that is, since the introduction of illegal restrictions by Western countries.

Russia's current account surplus in March 2024 is the second largest on record, after March 2022.

2023

Surplus of $50.2 billion

The current account surplus in Russia showed an extreme decline in the 4th quarter of 2023 according to preliminary estimates of the Central Bank of the Russian Federation - only 10.7 billion vs 41.7 billion in 2022, 47 billion in 2021 and an average 17.3 billion in 2017-2020 for the fourth quarter.

For the entire 2023, the STO surplus decreased to 50.2 billion compared to 238 billion in 2022, 122 billion in 2021 and about 62 billion in 2017-2020.

The Bank of Russia predicted the current account balance at the end of 2023 at $75 billion.

The trade surplus (goods + services) in the 4th quarter decreased to 20.6 billion vs 54.5 and 62.2 billion two years earlier and 31.1 billion in 4q17-20.

Exports of goods and services amounted to only 115.8 billion vs 156.3 billion in 2022 and 171 billion and 2022 and even less than 123.3 billion in 4Q17-20.

Imports of goods and services, on the contrary, are quite high - 95.1 billion vs 101.9 and 108.9 billion over the previous two years and 91.6 billion in 4q17-20. No trade blockade of Russia has yet been completed.

Despite the sanctions, exports are slightly below the norm (it was possible to effectively redirect export flows to Asia), imports are above the norm. The rise in global import prices after the strongest inflationary storm in 40 years is affected, plus the critical need for investment imports, which either come from China or through various trade gateways in the CIS countries.

December for the service station was terrible - near-zero surplus. Imports could not be repaid, quite at the level of 2022 - 36 vs 37.8 billion in December 22, and exports sank heavily - 41.6 vs 60 billion.

With such terrible indicators of service stations, the foreign exchange market was saved by exporters (a record return of formed revenue in October-November), the Central Bank of the Russian Federation and a decrease in toxic capital outflow, which decreased by an average of three times compared to 3q23.

Since mid-February, the Central Bank of the Russian Federation with interventions accelerated seriously at a quarterly rate of about 12 billion, which is 4-5 times higher than activity in 2023. Therefore, the ruble strengthened with very weak trade indicators.

$53.8 billion surplus over 10 months

The inflow of funds to Russia is gaining momentum amid the recovery in oil exports. The current account surplus of Russia is increasing, confirming the recently revised expectations of the Bank of Russia and supporting the ruble.

The positive balance of the current account of the balance of payments of the Russian Federation in January-October 2023 amounted to $53.8 billion, which is 3.9 times less than in the same period in 2022 ($208.8 billion). The surplus in October exceeded $11 billion for the second consecutive month, after reaching its highest level this year in the previous month.

Traditional seasonal weakness in summer

The current account of Russia has a pronounced seasonal character and is always weak in the summer.

Decrease in current account in Q1

A significant part of the current account surplus of Russia is concentrated outside the accounts of the Central Bank of the Russian Federation.

The current account surplus of Russia in the eurozone in 2022 amounted to 85 billion euros, of which - at the end of 2022 - 57 billion euros were still in the accounts of the eurozone. In May 2023, IIF chief economist Robin Brooks proposed stealing this money from Russia, as other sanctions by the United States and its allies were ineffective.

2022: Record current account surplus of $233 billion

In 2022, Russia recorded a record current account surplus of $233 billion, compared with 122 billion in 2021 and an average annual surplus of 55 billion from 2016 to 2020, according to updated data from the Central Bank of the Russian Federation.

• The foreign trade balance of goods is a surplus of $308 billion (export of goods - 588 billion (+ 19% YoY), and imports 280 billion (-8% YoY))

• The foreign trade balance of services is a deficit of 22 billion (export of services - 48.5 billion (-13% YoY), import of services - 70.7 billion (-7% YoY)).

• Wage balance - deficit of 2.5 billion

• The balance of investment income is a deficit of 42 billion (to be received - 34.5 billion and 76.4 billion to be paid).

Despite the positive international investment position, Russia pays more on its obligations than it receives, which is due to both the differential of interest rates and the toxic withdrawal of assets into "black holes," from where there is no investment income (concealment of financial assets).

It is interesting to assess the distribution of foreign exchange outflows from Russia. In 2022, the outflow amounted to 234 billion excluding operations on gold reserves at the beginning of the year.

• 129 billion went to reduce obligations (direct investments - 43.1 billion, portfolio investments - 34 billion and other investments - 38 billion and 14.7 billion in derivatives).

• 105 billion was redistributed to the growth of assets, but not everything is so clear. External assets were reduced by direct investments by 14 billion, for portfolio investments by 10.8 billion and minus 18 billion in derivatives.

• The increase in assets was in other investments by 147 billion, where operations were mainly carried out by the non-financial sector and the population. A significant part (79 billion) went into foreign currency cash in foreign banks and loans to subsidiaries in foreign jurisdiction, but 69 billion was distributed in an unknown direction. These can be both trade loans and advances, as well as dubious operations and gray schemes. A quarter of the current account surplus is going in an unknown direction.