Russia's current account surplus has experienced a significant decline of 85% from January to July 2023 compared to the same period last year, according to data from the central bank. This decline follows a record high surplus in 2022, fueled by booming oil and gas exports amidst the war in Ukraine. However, the slump in energy exports has led to Russia's struggle in maintaining its energy trade.
The current account is a measure of the total money flowing in and out of the country for trade and investments. In the first six months of 2022, the current account reached $165.4 billion, as Russia continued its oil and gas exports despite the ongoing conflict in Ukraine. This allowed foreign payments to continue contributing to Russia's economy. However, energy revenues have since plummeted, declining by 41% year-over-year for the first seven months of 2023. As a result, Russia's current account now stands at $25.2 billion, reflecting the impact of the war and Western sanctions on its economy.
Although the annualized figure shows a slight increase from the previous six-month period, the government press release highlights a 68.4% drop in the trade surplus year-over-year, which has contributed to the lower current account figures. The central bank attributes this decline to a decrease in total export volumes and global prices for Russia's key commodities compared to the previous year. Furthermore, the reduction in dividends collected by Russian companies in favor of non-residents has also contributed to the decrease in the total deficit in primary and secondary income.
Despite trade shunning from the US and other Western partners, China and India have emerged as significant buyers of Russian oil. However, the economic benefits of these sales have been limited due to steep discounts and lengthy shipping routes.
While Moscow maintains a relatively positive outlook on the war and its economy, underlying data such as retail sales, airline activity, and car sales indicate a bleaker economic landscape.