Balance of payments strengthens in early 2021

RUSSIA ECONOMICS - In Brief 10 Mar 2021 by Alexander Kudrin

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According to the CBR’s preliminary estimates, Russia’s current account surplus was at $13.1bn in 2m21, while the trade surplus reached $17.6bn. The latter figure is equal to the combined trade surplus in November and December 2020. The CBR has not yet published statistics on exports and imports – just an estimate of the trade balance is available. Given that the oil price kept moving up in recent months, it helped to offset the effect of relatively short in terms of working days January and December as normally volumes of exports and imports decline at the beginning of each year (assuming other factors being equal). It means, in turn, that Russia’s monthly imports didn’t decrease much in early 2021 relative to the last months of the previous year. Note that at year-end imports normally increase. In November-December 2020 monthly imports on average stood around $24bn, and it could be well the case that in absolute terms monthly imports in January and February 2021 could be close to this figure. If so, then it would mean strong y-o-y growth. Meanwhile, in December 2020, imports were already up by 2.3% y-o-y. In January-February 2020, Russia’s imports reached $17.1 bn and $18.5 bn respectively. Hence strong y-o-y growth of imports this year will most likely mean continuous recovery of non-food consumption in February and March.Overall, preliminary estimates of the balance of payments hint that apart from rising oil-and-gas taxes, a strong collection of the VAT and excise on imported goods can be expected, implying a continuous improvement in the fiscal performance.Evgeny GavrilenkovAlexander Kudrin