Russia’s current account surplus widens

RUSSIA ECONOMICS - In Brief 10 Nov 2022 by Alexander Kudrin

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The CBR reported that in 10M22, the current account surplus reached $215.4 bn and increased by $17.7 bn in October as in 9M22, it was at $197.7 bn. The monthly current account surplus in October was close to its average monthly level in 3Q22 (quarterly $51.2 bn) albeit was lower than average monthly volume in 1H22. Still, it remains very strong despite the cap on Russian oil organically introduced by the markets. The discount between Brent and Urals remains wide enough as it fluctuated between $22/bbl and $24/bbl in recent weeks, but was narrower than several months ago. This discount was naturally introduced by the markets right after the start of the military operation in Ukraine, and markets prove once again to be more efficient than bureaucrats, who continue to debate what a price cap mechanism might be.Russia's goods and services balance reached $257.1 bn in 10M22, while the traditionally negative income balance widened to only $41.7 bn by the end of October (from negative $40.1 bn in 9M22). As foreign companies keep exiting Russia, the income balance will continue to be less and less negative, helping to keep the current account balance in positive territory. Evgeny Gavrilenkov Alexander Kudrin