23/1/16: Russian External Balance 2015

At the end of 2015, based on the preliminary estimates of 2015 balance of payments statistics from the Central Bank of Russia, Russian trade volumes with the rest of the world stood at just under 2010 levels. This is hardly new, as 2010 values of trade - both for exports and imports of goods and services - have been breached back in 3Q 2015. This erases gains between 2010 and 2013 (with 2013 posting all-time record high volumes and values of trade flows)

In 2015, exports revenues fell more than 30% in USD terms and 17% in Euro terms year on year. Imports expenditures fell 35% in USD terms and 22% in Euro terms. Perhaps somewhat surprisingly, 4Q figures came in broadly in line with annual figures. This is surprising due to imports and exports-lifting seasonal effects.

As exports shrunk less than imports, current account surplus actually rose both in level terms and relative to GDP. At the peak trade year of 2013, current account surplus was USD35 billion, rising to USD58 billion in 2014. 2015 preliminary estimate puts full year current account surplus at USD66 billion. Relative to GDP, current account surplus rose from 1.7% in 2013 to 5.4% in 2015.

These are remarkable figures, reflective of both devaluation of the ruble, the ability of the economy to take on imports contraction, and the relative resilience of exporters. Exports of goods and services were down massively, still, from USD593 billion in 2013 to USD389 billion in 2015. While trade balance in Goods fell from USD182 billion in 2013 to USD146 billion in 2015, trade deficit in services shrunk from USD58 billion in 2013 to USD37 billion in 2015.

The key to overall balance improvements, however, was in the category of “Other Current Account” - covering foreign earnings expatriation from Russia - here the deficit of USD89 billion in 2013 fell to USD76 billion in 2014 and to USD43 billion in 2015. Similarly, on the balance of payments side, “Fictitious Transactions” line of balance - covering Russian corporates exports of capital from Russia - fell from USD27 billion in 2013 to USD9 billion in 2014 and USD 1 billion in 2015. Balance of payments for Private Sector also improved, dramatically, with deficit of USD63 billion in 2013 ballooning to a deficit of USD152 billion in 2014 before falling to a deficit of USD57 billion in 2015.

BOFIT provides a neat summary table of latest Balance of Payments breakdown figures for 2013-2015:

Source: BOFIT

12/9/15: Russian Exports & Trade Balance for July

Central Bank of Russia released latest figures (for July 2015) covering external trade in goods. Here are some details.

Russian exports of goods (in US dollar terms) fell 40.15% y/y in July following a 25.6% drop in June. These are not seasonally-adjusted figures, so we can only do y/y comparatives. The drop was sharper for Russian trade with countries outside the CIS (down 42.35% in July) than with CIS countries (down 'only' 22.71%). This implies a reversal in June changes when exports to CIS countries fell more substantially than exports to non-CIS countries (-30.46% and -24.76% respectively).

Taking out some monthly volatility, 3mo average for Russian exports of goods were down 32.15% y/y in May-July, with distribution of declines pretty much even across both CIS and non-CIS states (-32.19% and -32.15%, respectively).

Russian imports of goods fell even more than exports in percentage terms. Russian imports of goods fell 41.87% in July in y/y terms, having previously posted a decline of 38.3% in June. 3mo average through July 2015 was down 40.19% y/y.

However, in level terms, declines in exports were sharper than declines in imports: 3mo average through July 2015 for exports was down USD14.04 billion against decline in imports of USD10.99 billion.

As the result, Russian trade balance (goods only) deteriorated sharply in July 2015, declining 37.21% y/y in July, having previously posted a relatively small decline of 1.24% in June. On a 3mo average basis through July 2015, trade balance in goods was down USD3.041 billion compared to the same period in 2014 (-18.66%). On 3mo average basis, trade balance with CIS was down marginally USD802 million in value terms, but sharply in percentage terms (-29.3%), while trade balance with non-CIS states was down sharply in both levels (USD2.24 billion) and in percentage terms (-16.5%).

As chart above shows, the contraction in July Trade Balance was very sharp. To see this, consider historical series for Russian Trade Balance in goods since January 2000:

July 2015 y/y decline in overall Trade Balance for goods ranks as the sharpest since July 2009 and 13th sharpest decline since January 2000.

CONCLUSIONS: Overall July drop in Russian Trade Balance (goods only) was driven primarily by lower energy (oil and gas) prices and deterioration in Ruble valuations (Ruble is down some 15% since July 1).

As a related note, as reported by Bloomberg earlier this month, despite another strong harvest, Russian exporters of wheat are being held out of the global markets by the Government measures aimed at curbing food inflation at home.

13/2/15: January Russian imports ex-CIS down massively

Russian external trade figures for Q4 2014 show accelerating trend toward decline in both exports and imports.

According to the latest data, value of goods exports and imports in Q4 2014 fell almost 20% y/y, with December fall of 25% y/y. Russian imports from Ukraine were down some 50% and exports to Ukraine fell 70% y/y.

Oil price effects were pretty substantial as Urals price fell by almost 1/3rd in Q4 2014 compared to Q4 2013. But there was also a 7% decline in the volume of oil exports, as well as ca 30% drop in gas exports by volume. Offsetting these, petroleum products exports were up 9% y/y and other commodities exports held up pretty well and even rose.

Q4 2014 imports of machinery and transport equipment were down some 20% y/y, in line with the decline in imports of food, textiles and passenger cars.

Overall, in 2014, oil and gas accounted for roughly 70% of all Russian exports, largely unchanged on 2013. Overall value of goods exports in 2014 was down 6% (USD32 billion) on 2013, while goods imports fell 10% (just over USD22 billion).


Meanwhile, Russian trade balance posted 3.7% higher surplus for 2014, rising to USD188.66 billion compared to 2013 level of USD181.94 billion, although the surplus was still short of 2011 peak of USD196.85 billion.

Total exports reached USD496.66 billion in 2014, which is some 5.1% lower than in 2013, while total value of imports was down 9.8% y/y (to USD341.34 billion). Imports finished 2014 at their lowest level in four years. These are figures from the Central Bank of Russia.

Based on Russian Customs data, exports registered with Customs stood at USD496.94 billion in 2014, down 5.8% y/y and imports were USD314.97 billion, down 9.2% y/y. Trade balance stood at USD210.96 billion, down 0.6%. Trade balance has deteriorated in November-December 2014 very significantly, down 24.5% and 25.2% y/y, respectively. Only comparable level of deterioration was marked in February 2014 when Russian trade balance fell 23.7% y/y and in September, when it fell 24.5%.

And a 'wake up and smell the roses' moment - January data (preliminary and covering main categories of goods) for Russian imports from the trading partners excluding CIS shows imports of goods falling a massive 40.8% y/y to USD9.855 billion in January 2015, compared to USD16.65 billion in January 2014. Food imports are down 41.9%, Chemicals imports are down 35.3%, Textiles and Clothing imports are down 39.2%, Machinery and Equipment imports are down 44.6%.

25/1/15: Russian Current Account Improved in 2014

I have remarked on a number of occasions just how rapidly Russian current account can adjust to an external shock. This time around, the adjustment is via decreasing imports to compensate for both - the ruble devaluation effects and the sanctions/counter-sanctions effects, as well as the traditional economic recession pressures.


Based on the preliminary data from the Central Bank of Russia, Russian exports of goods and services fell 19% in dollar terms in Q4 2014 and were down 12% in euros. Russian imports of goods and services fell at the same rate.

Full year 2014 preliminary estimates show exports down 6% and imports down 9% in both dollar and euro terms. In 2013, exports of goods and services run USD593 billion or 28.3% of GDP. In 2014 exports of goods and services slipped to USD560 billion, but stood at 29.4% of GDP (these are dollar-denominated GDP figures). Trade balance in goods stood at USD182 billion (8.7% of GDP) in 2013 and this rose to USD186 billion (9.7% of GDP) in 2014. Trade balance in services also improved, from a deficit of USD55 billion in 2013 (-2.8% of GDP) to a deficit of USD55 billion (-2.9% of GDP) in 2014.

While goods imports contracted 10% over full year 2014, in Q4 2014, goods exports fell a whooping 19% in USD terms. Q4 2014 imports of tourism services (travel by Russian residents abroad) fell 20% compered to Q4 2013.


On the Financial Account side, State accounts excluding the Central Bank were in a healthy surplus of USD30 billion for the full year 2014, up on USD 5 billion in 2013.

Private sector accounts, however, were abysmal. Total Private Sector financial accounts finished 2014 with a deficit of USD150 billion (-7.9% of GDP) which is far worse than USD62 billion (-3.0% of GDP) in 2013. The USD150 billion figures is what we usually attribute to capital flight from Russia. This figure consisted of USD50 billion of financial deficit in the banking sector (against USD7 billion deficit in 2013) and USD 100 billion deficit on ex-banks private sector accounts (against USD55 billion in 2013).

Good news is: fictitious transactions (basically a shell-game with company money involving foreign offshore holding firms) shrunk dramatically in 2014: falling from the net outflow of capital via such transactions of USD27 billion in 2013 to net outflow USD 9 billion in 2014.

Another interesting note: as noted by me on numerous occasions, part of capital outflows was down to aggressive dollarisation of the economy at the end of 2014, which saw build up of private sector forex cash deposits held in Russia. Based on CBR data, in 2013 such deposits shrunk by USD0.3 billion, while in 2014 they rose by USD34 billion (USD18 billion of that increase took place in Q4 2014 alone).


Overall, Russian current account surplus improved significantly in 2014 despite all the cash outflows and decline in exports. In 2013, Russian current account surplus stood at USD34 billion (1.6% of GDP), and in 2014 this increased to USD57 billion (3.0% of GDP), with USD11 billion of that accruing in Q4 2014 alone.

We can expect more dramatic declines in both, oil and gas revenues on exports side and imports of goods and services in 2015. One key parameter to look at is exports and imports of services. The reasons for this are simple, albeit not easy to gauge or forecast.

Firstly, significant share of Russian exports of services (and also some associated imports) is down to effectively Russian companies producing services using (in accounting and also contracting sense) off-shore affiliates. We might see some of this activity being on-shored in Russia, with resulting decrease in imports and a rise in exports.

Secondly, Russian enterprises and investors are likely to cut back on imports of key financial, ICT and business consultancy services as the Russian economy suffers from downward pressures on investment and growth.