Current account narrows in 4Q22 but still remains very strong

RUSSIA ECONOMICS - In Brief 17 Jan 2023 by Alexander Kudrin
According to the CBR preliminary estimate, Russia’s current account reached $227.4bn in 2022. In 4Q22, it narrowed to $31.4bn from $48.0bn in 3Q22 and a record high of $78.5bn in 2Q22. The trade surplus reached $282.3bn in 2022 and also narrowed in 4Q22 (to $45.9bn, i.e., roughly one-half of its 2Q22 level). Exports of goods and services grew to $628.1bn in 2022, while imports climbed to $345.8bn. In 4Q22, exports declined to $144.7bn (from $163.2bn in 2Q22) as the country's export energy prices fell, while imports moved to $98.9bn (from $71.4bn in 2Q22) as domestic demand started to recover. Overall, the current account looked strong in 2022 and 4Q22 alone. In 2023, the current account will keep narrowing as the spread between Brent and Urals is likely to stay wide (in recent days, it fluctuated between $33/bbl and $34/bbl) and, at some point, may hopefully trigger the depreciation of the ruble. If the latter remains as strong as it is now, then the revenue flow to the Russian budget (at least from the oil-and-gas sector) will go down significantly, thus causing some problems for the budget. Meanwhile, the current account can narrow to slightly above $100-$120bn in 2023, i.e., shrink by more than one-half relative to the 2022 record. Evgeny Gavrilenkov Alexander Kudrin

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