Current account was historically strong in 3Q21

RUSSIA ECONOMICS - In Brief 11 Oct 2021 by Alexander Kudrin

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The Central bank reported that in 3Q21, the current account widened to a historical record of $40.8bn, which was almost half of its entire 9M21 value ($82.2 bn). Previously the strongest ever current account was recorded in 1Q18 ($39.0 bn) and 1Q08 ($38.0 bn). Usually, imports are low early in the year (assuming other factors being equal) as January and February are short months. This supports the trade balance and the current account (January has fewer working days due to Russia’s extended New Year holiday break). This year, imports were up in 9M21 and 3Q21 by an impressive 28.8% and 39.0% y-o-y. Exports, however, grew faster – in part on the back of higher energy prices and to some extent due to increased volumes of exported hydrocarbons (including refined products).The traditionally negative services balance didn’t widen much as foreign tourism remained largely closed for many Russians who stubbornly remain unvaccinated. In nominal terms, in 9M21, it was more or less comparable with last year’s number.What also looks essential is that non-energy exports grew much faster than imports, namely by 54.4% y-o-y in 3Q21 and 41.3% in 9M21. Non-energy exports reached in 9M21 $178.2bn, i.e., 51.2% of total exports ($343.3 bn). In 3Q21 alone, non-energy exports accounted for 54.0% of the quarterly total. Note that Russia’s natural gas exports reached $33.1 bn in 9M21, implying a two-fold increase y-o-y. In 3Q21 alone, exports of natural gas increased by a factor of 2.5. Apart from that, Russia continued to export LNG ($5.6 bn).The brisk growth of dollar-denominated non-energy exports despite a much faster increase in energy prices means that the gradual diversification of Russ...