The Russian current account strengthens in July

RUSSIA ECONOMICS - In Brief 10 Aug 2021 by Alexander Kudrin

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The CBR released its preliminary estimate of the main elements of the 7M21 current account surplus, which appeared very strong. The current account surplus reached $51.7 bn in 7M21 and increased by $8.6 bn in July as according to the 1H21 balance of payments statistics, it was $43.1 bn during that period.It looks as though the widening of the trade surplus was the main reason for that. Even though the oil price didn’t change much in July compared to June (Minfin estimated average monthly Urals prices at $73.92/bbl and $72.51/bbl in these two months), the wider trade surplus could have resulted from increased volumes of energy exports. Non-energy could have increased as well. In 1H21, Russia’s trade surplus was at $62.4 bn, while in 7M21, it reached $81.1 bn, implying that in July alone, it was $18.7 bn (versus the average monthly figure of $10.4 bn in 1H21). Such an increase looks very impressive, and it could be well the case that the previously published 1H21 might be revised up at a later stage. However, such an increase in the trade surplus in July could have stemmed from increased physical volumes of exports combined with that imports may have stopped growing. Total exports may have reached $42.0 - $43.0 bn in July (versus around $38.6 bn in June, while imports could have slightly decreased from around monthly $ 25.0 seen in the several previous months.The CBR didn’t publish more details, apart from the fact that international reserves grew by $14.5 bn in 7M21 on the back of Minfin’s FX purchases stipulated by the fiscal rule.As the volumes of exports increased, Russia’s balance of payments will look very strong in the remaining part of the year - even in the case...