Balance of payments looks stable

RUSSIA ECONOMICS - In Brief 14 Jun 2024 by Evgeny Gavrilenkov

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The Russian Central Bank published its flash estimate of the 5M24 balance of payments, and it looks as though its trends remain sustainable. In 5M24, the current account surplus reached $38.1 bln. It accounted for $5.1 bln in May alone, i.e., slightly lower than in April ($7.1 bln). Exports in May reached $34.8 bln (up from April’s $33.2 bln figure). Imports in May also grew relative to April (to $24.2 bln from $22.5 bln bln). The trade balance surplus reached $56.0 bln as exports and imports climbed to $169.5 bln and $113.4 bln (a minor difference is due to rounding errors). The economy adapts to new geopolitical realities as foreign trade statistics point to steady economic growth. Domestic demand seems stable, while exports remain high enough to secure macroeconomic stability. In 5M24, the current account and the trade balance appeared wider than in 5M23, as imports this year corrected moderately in the aftermath of last year’s overheating. Generally, Russia doesn’t need the current account surplus to be too wide, as savings in foreign instruments may appear risky these days. As there have been some technical issues with payments for imports in recent months, we may expect that imports will keep growing as the domestic demand remains strong enough. Meanwhile, the FX market is also adapting to the current peculiarities (that became a new normal) as the CBR reported that the CNY/RUB pair traded on Russia’s exchanges and on a p2p basis exceeded 43% of the total turnover. Currency swaps involving the CNY/RUB pair exceeded 69% of the entire swap trading market in April.