The current account turns slightly negative in July, GDP growth slows in 1H24

RUSSIA ECONOMICS - In Brief 14 Aug 2024 by Evgeny Gavrilenkov

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The Central bank reported that the Current account surplus amounted to $39.7 bln, i.e., slightly lower than in 1H24 as in July alone, it turned slightly negative (-$0.5 bln). It looks as though the fluctuation in oil prices was the main reason for that (apart from a few other factors). At the beginning of July, the Urals price hovered over $80/bbl, while at the end of the month, it fell to low $70/bbl levels. Therefore, monthly exports declined in July to $32.6 bln from $35-37 bln in May and June. Monthly imports remained relatively stable in recent months ($24-25 bln). The services balance turned more negative in July (-$4.2 bln) amid increased foreign traveling by Russian tourists. The income balance also turned more negative (-$4.4 bln). The latter two variables will decrease in the next few months as they are largely seasonal. As the oil price (Urals) recently bounced back to mid-$70/bbl levels, the monthly current account will return to positive levels, and in 2024 as a whole, it can be in surplus of about $80 bln. Meanwhile, recently, the ruble saw a healthy correction, having returned above the USD/RUB90 area. It will imply better fiscal performance and more chances for faster GDP growth. Rosstat recently reported that the Russian GDP grew by 4.0% y-o-y in 2Q24. It was just a flash estimate and may be updated later on. Taking this figure as given, for the time being, it appears that GDP grew by 4.7% in 1H24, posting a deceleration Q-o-Q. We believe that in 3Q24, growth will gradually return to the previous trajectory.