Page 47 - RusRPTAug19

5.2.2 Current account dynamics
Russia’s current account posted a $45.6bn surplus in the first half of this year, the Central Bank of Russia (CBR) reported on July 10 -- down 4% y/y on weaker exports.
The second quarter alone, the C/A declined to $12.1bn (-32% y/y), the weakest quarterly result since 3Q17. Going forward, at current oil price and exchange rates analysts at Raiffeisen Bank International (RBI) say they do not expect the C/A to improve significantly in the third quarter of this year.
The surplus, according to preliminary estimates, was mainly the result of a large trade surplus ($86.5bn). The other data shows a significant increase in FDI ($11.6bn in 1H19, up by x1.4 y/y) and a reversal of capital flows to an inflow of $7.9bn in June vs an outflow of $35.2bn in 5M19.
Softer crude oil prices offset by weak domestic demand and lower imports all contributed to the surplus. In 1H19, Urals crude price fell 4.5% y/y, which led to a 3.4% y/y fall in trade balance and 4% y/y decline in current account surplus. However, lower oil prices were offset by weak domestic demand – the latter drove volumes of imports down by 3% y/y.
“Overall, CBR data shows that Russia’s external accounts remain in a solid state,” BSC Global Markets chief economist Vladimir Tikhomirov said in a note. “Russia’s external accounts remain solid, albeit in part a function of weaker demand. The continued current account surplus underscores two key positives – a fiscal surplus and a strong external position.
47 RUSSIA Country Report August 2019 www.intellinews.com