Current account surplus narrows in February but still remains strong enough

RUSSIA ECONOMICS - In Brief 10 Mar 2023 by Alexander Kudrin

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The CBR reported that the current narrowed to $5.8bn last month, while in January it was at $7.1bn. Therefore, in 2M23, it reached $12.9bn and was well below $37.7 bn in 2M22. The balance of goods and services was at $15.3 bn, implying that the income balance, i.e., the difference between the current account balance and the balance of goods and services, was moderate – $2.4 bn (versus a negative balance of $5.8 bn in 2M22. Dividend and interest payments to other countries decreased massively. They will remain well below the amounts seen in the past, which will help to keep the current account in positive territory. Most likely the current account surplus will widen in March as the spread between Brent and Urals narrowed recently. The higher price of Russian oil will somehow offset reduced volumes of crude exports. Overall, the ongoing narrowing of the current account is a very positive trend as it helps the overvalued ruble weaken. A weaker ruble will mean more taxes accumulated in the country’s government coffers. It will also help domestic manufacturers to grow. Evgeny Gavrilenkov Alexander Kudrin