Page 60 - RusRPTNov20

5.2.2​ Current account dynamics
The current account balance totalled $23bn​, after $49bn in 8mo19. The financial account of the private sector advanced to $35bn, from $20bn, mainly on the back of the decline in the liabilities of the banking sector and other sectors to the rest of the world. BCS estimates that the current account will end the year with a surplus of $35bn, which is less than half of the $75bn posted in 2019, but still in the black after fears that the current account would turn negative where floated at the start of this year.
Current account in surplus in 3Q20 thanks to collapse of tourism business, but capital outflow continues. ​According to preliminary estimates published by the CBR, Russia's current account balance turned positive in 3Q20 and amounted to $2.5bn, this after the $0.5bn deficit the previous quarter (revised downward from a $0.6bn surplus).
The total surplus for 9m20 reached $24.1bn. Based on this figure, it can be deduced that September saw a surplus of $0.8bn following the $1.3bn deficit in August.
The surplus in 9m20 was less than half the size of that ($54.1bn) registered in 9m19. A contraction in the trade surplus ($64.8bn in 9m20 compared with $124.3bn in 9m19) due to lower oil and gas prices and the cut to oil production (due to the OPEC+ deal) was the main reason behind the weaker current account. The deficit in net exports of services narrowed to $12.2bn in 9m20 from $26.5bn in 9m19, while the net income deficit narrowed to $28.5bn from $43.6bn.
The capital outflow from the private sector resumed in September, reaching $2.1bn (which meant $7.9bn in 3Q20 and $35.5bn in 9m20), after the $5.9bn outflow in July and $0.1bn inflow in August.
The continued outflow of capital was one of the reasons why the ruble lost 3% against the dollar in September (in terms of the monthly average).
The gap between the current account surplus ($2.5bn in 3Q20) and capital outflow from the private sector ($7.9bn) was covered by the depletion of FX reserves ($2.3bn) and an inflow into the public sector.
As geopolitical risks remain elevated, we believe that the capital outflow could continue in the following months, thus putting pressure on the ruble. For more on the factors that have driven the ruble's recent performance, see our report "The Ruble Paradox of the Pandemic."
Apart from the 2Q20 lockdowns, the contraction in the goods balance ($17bn)
60 ​RUSSIA Country Report​ November 2020 www.intellinews.com