Russia’s economy has taken a hit as its current account surplus collapses by 93%

Russian President Vladimir Putin.

Russian President Vladimir Putin.GAVRIIL GRIGOROV/SPUTNIK/AFP via Getty Images

  • Russia’s current account balance has collapsed, in another blow to the struggling economy.

  • The country’s surplus fell 93% to $5.4 billion in the latest quarter from a year earlier, Bank of Russia data showed.

  • This comes as Western sanctions squeeze Russia’s energy exports.

Russia’s economic woes are deepening, with the latest blow having come in the form of a collapse in its current account.

The country posted a current account surplus of $5.4 billion for the April-June quarter, down 93% from the record high of $76.7 billion in the same period of 2022, according to data from the Russian central bank. It is also the smallest surplus since the third quarter of 2020.

It shows the blow that Western economic sanctions – imposed on Moscow in response to its war on Ukraine – have dealt the country’s economy, squeezing its energy exports.

Worsening trade momentum is also reflected in the ruble’s fall. The Russian currency fell to a 15-month low of around 94.48 to the dollar earlier in July, hit hard by the country’s weakening terms of trade.

“The decline in the surplus of the balance of foreign trade in goods in January-June 2023 compared to the comparable period of 2022 was caused both by a decrease in the physical volumes of export deliveries and by the deterioration of the price situation for basic products Russian export products, energy products contributed the most to the decline in the value of exports,” the Bank of Russia said.

Moscow’s main source of income comes from sales of its oil and gas products, but the price caps and bans imposed on Russia’s energy exports by a group of nations following its unprecedented attack on the Ukraine have meant that its commodities business has been hit hard.

In June, the Russian Finance Ministry revealed that revenue from oil and gas taxes fell 36% from a year ago to around 570.7 billion rubles, while profits from products crude and oil prices fell 31% to 425.7 billion rubles.

Market commentators have weighed in on Russia’s struggling economy, with Yale researchers saying President Vladimir Putin is cannibalizing the country’s economy in his mission to take over Ukraine.

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