The current account surplus widens in 10M23

RUSSIA ECONOMICS - In Brief 14 Nov 2023 by Evgeny Gavrilenkov

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The CBR’s preliminary report suggested that in October, the current account surplus was almost the same as in September ($11.2 bn versus $11.4 bn). In 10M23, the current account surplus widened to $53.8 bn. Such an improvement in Russia’s external balance occurred amid a higher Brent price and narrowed the Urals discount against it. In 1H23, the current account surplus was $24.3 bn. Note that in July and August, this surplus was only $1.3 bn and $5.6 bn. As the ruble weakened and in September-October fluctuated within the $/RUB90 - $/RUB100 range, imports stopped growing, which also helped the current account to widen. Exports fluctuated between $36 bn and $40 bn in August to October. Imports declined to $22.9 bn in October (from monthly $25.5 bn in July and August and $24.7 bn in September. In September and October, the monthly trade surplus was $15.3 bn and $14.3 bn. In 10M23, the trade surplus widened to $104.0 bn. The services balance (traditionally in deficit) posted a monthly deficit of a mere $2.2bn in September and October. In July and August, this deficit was $3.3 bn and $3.7 bn. As foreign investors keep leaving Russia and repatriation of profits remains complicated in some cases, the deficit of the income balance, which used to be wide (over $43bn in 2021 as a whole, for instance), narrowed to $4.6 bn in 3Q23. In October, it was just $0.9 bn, and in 10M23 - $23.0 bn. As in such an environment, the authorities had recently tightened capital controls and imposed obligatory repatriation of export earnings, and the ruble recently strengthened to $/RUB 90. It may appreciate even more, which won’t be a desirable development as the oil price corrected by about $10/...