Russian macro: in search of a new normal
After a yearly break, the Central Bank of Russia published monthly foreign trade statistics, albeit not as detailed as previously. After February 2022, the CBR stopped publishing monthly data on exports and imports, though recently it provided the aggregate foreign trade data without any breakdown—either by country or product. The CBR’s recent 1Q23 estimate suggests that the current account surplus narrowed to $18.6 bln as the trade balance shrank to $29.0 bln while the services balance (-$4.9 bln) was less negative than a year ago. The income balance remained moderately negative as well (-$5.5 bln). Exports and imports reached $100.8 bln and $71.8 bln, respectively, and the fact that the latter were almost the same as in 1Q22 ($71.5 bln) confirms that domestic demand has recovered (note that imports contracted sharply in 2Q22 and recovered in 2H22). Overall, one may expect monthly imports to remain stable for the rest of the year (and even increase), implying the recovery in domestic demand is set to continue.
It seems that amid the Western sanctions and Russia’s newly imposed regulations in 2022 (such as capital controls) some traditional relationships between various economic indicators (which were not always necessarily straightforward due to the influence of various other factors) appeared to have been completely broken in 2022. However, these relationships will reappear in the medium-to-long-term horizon as market forces will outweigh the games of bureaucrats. Although the ruble may weaken a bit more from its current level, it may bounce back as the low USD/RUB 80 level seems to be comfortable for the economy. This conclusion will remain relevant assuming that other current factors stay in place, such as no significant change in the sanctions regime and the continuation of the country’s gradual transformation of foreign trade toward Asia and other neutral jurisdictions.
Now read on...
Register to sample a report