Russia Expected to Record Largest Ever Current Account Surplus This Year

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[Asia Economy International Department Reporter] Despite the intense sanctions from the United States and other Western countries, there is a forecast that Russia will record the largest current account surplus in history this year.

[Image source=Reuters Yonhap News]

According to the International Institute of Finance (IIF) on the 3rd, Russia's current account surplus is estimated to reach $200 billion to $240 billion this year. This far exceeds last year's record surplus of $120 billion (KRW 145.31 trillion).

The significant rise in international oil prices is expected to increase Russia's export revenue.

In fact, West Texas Intermediate (WTI) crude oil surged 33% in the first quarter of this year alone. Due to sanctions from the United States and other Western countries, as well as companies' 'self-sanctions,' it is difficult for Russia to find vessels to transport its domestic crude oil.

Moreover, except for some countries like China, there are no countries purchasing Russian crude oil, so Russian Urals crude is being sold at about 26% cheaper than North Sea Brent crude.

Despite this situation, the IIF estimated that Russia's oil export revenue in March will approach a record high of $11.1 billion.

However, the IIF explained that although there is income from oil exports, there are no corresponding expenditures, so Russia is showing a recession-type surplus structure. The IIF added that Russia's current account size is determined by energy and other raw materials in the export sector, and processed goods in the import sector.

The IIF particularly noted that due to the sharp decline in Russian imports caused by Western sanctions, the current account surplus could increase further, and forecast that Russia's economic size will shrink by 15% compared to last year.

In a survey conducted by Bloomberg from the 18th to the 23rd of last month targeting 24 financial market economists, the average forecast for Russia's GDP growth rate this year was minus (-) 9.6%. This is worse than 2009, when Russia recorded a -7.8% growth rate due to the 2008 global financial crisis and the collapse of international commodity prices.