Russia Watch: C/A surplus down 2020, Q1 to be strong on seasonality & exports
The Central Bank of Russia (CBR) estimates that in 2020 the current account (C/A) surplus dropped twofold to USD 32.5 bn. Yet, in Q4 there was an improvement vs Q3 on the back of stronger oil and gas . Q1 surplus expected strong on seasonality and exports.
| C/A surplus halves in 2020 on export decrease (USD bn) |
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| Central Bank of Russia, RBI/Raiffeisen Research |
At the same time, imports are recovering at an accelerated pace driven by the investment segment (machinery and equipment) and pharmaceutical goods. In Q4, imports were only 3% down in yoy terms. Going forward, this trend will put pressure on the C/A as we expect investment demand to increase supported by corporate capex needs and federal budget investment expenditure (including the implementation of the National Plan for economic recovery).
In Q1 2021 we expect a seasonally strong C/A surplus (historically, Q1 accounts for 1/3 of the annual figure). This year in Q1, along with seasonally low imports the C/A will be supported by a recovery in exports. Although such fundamentals call for a stronger RUB, the appreciation may not materialize given sanctions risks that investors already price in.
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