The current account surplus widens in 2Q22

RUSSIA ECONOMICS - In Brief 11 Jul 2022 by Alexander Kudrin

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The Central bank reported that Russia's current account surplus widened in 2Q22 to $70.1 bn from $68.4 bn in 1Q22, and reached $138.5 bn in 1H22. In 1H21 this surplus accounted for $39.7 bn. The CBR no longer publishes detailed balance of payments statistics as it used to do, so that a few very aggregate figures are available. Exports of goods and services combined reached $153.1 bn and $319.5 bn in 2Q22 and 1H22 accordingly. Imports of goods and services accounted for $72.3 bn and $161.1 bn for these periods. In 2Q21, combined imports of goods and services were higher ($93.2 bn) as in 2Q22, while exports were much lower last year ($127.9 bn in 2Q21). Overall, despite various restrictions imposed on Russia by "unfriendly" countries, increased discount for Urals compared to Brent Russia's exports remained strong, which backed both the budget revenues and economic growth (so far). At the same time, a too strong current account caused the ruble to appreciate to unprecedented levels, especially in real terms, which may start affecting negatively the tradable sector of the economy. At this stage it is not yet clear how the current account may narrow as imports from the EU and other "unfriendly" countries are restricted while Russia's domestic demand remains suppressed. Hence, the ruble is likely to stay too strong for some time. Evgeny Gavrilenkov Alexander Kudrin