Page 62 - RusRPTJun20

5.2.2​ Current account dynamics
The current account was surprisingly in surplus of $1.8bn in April ($23.5bn in 4M20)​ helped by the trade surplus and modest volume of capital outflows. The latter reached $6.9bn in April ($23.9bn in 4M20) – a far cry from the monthly outflows of between $20bn and $50bn that Russia recorded in late 2008 and early 2014.
While oil export revenue tanked with the price of oil in March, what kept the trade account relatively balanced was the parallel fall in imports.
Opinion is now divided where the current account will end the year. BCS GM forecast a surplus of $45bn, which is half last year’s result. The CBR forecast a deficit of $35bn - the first for two decades.
As much will depend on the performance of imports as the oil price in determining what the actual number will be.
In January-April 2020 the current account surplus of the balance of payments of the Russian Federation decreased to $23.5bn ​against $40.1bn in the corresponding period last year, according to a preliminary assessment of the Bank of Russia.
The dynamics of the indicator was determined by a serious weakening of the trade balance, which was especially noticeable in April this year due to the outstripping export contraction as a result of the deterioration in aggregate external demand and an unprecedented deterioration in the situation on the international hydrocarbon market.
Net lending to the rest of the world by the private sector in January-April 2020 amounted to $23.9bn ​($27.6bn in January-April 2019). In contrast to the situation a year earlier, when the accumulation of foreign assets by the private sector played the main role in the indicator’s dynamics, in the reporting period, a decrease in the banks ’external liabilities was significant, while the volume of operations on the placement of funds abroad by other sectors decreased.
The Institute of International Finance (IIF) forecasts Russia’s current account to shift to a modest deficit of 0.7% of GDP in 2020​, assuming that oil production will decline by 14% and (Brent) oil prices will average around $32.5/bbl. Import compression will partially counteract lower goods exports, and smaller dividend payments will improve the income balance markedly. C/A deficits are highly unusual in Russia and occurred only in two quarters since 2000—a result of the seasonality pattern of exports, tourism spending, and dividend payments. On the financial account side, swings in portfolio flows matter on the margin as non-residents hold roughly RUB2.9 tn (~$40 bn) in OFZ. wResident capital outflows will likely be limited for fear of sanctions, and dollarization remains in check due to the CBR’s credibility.
62​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com