The CBR’s revision of the FY12 BoP numbers was rather light and brought no surprises. Despite stable oil prices over the last two years, the current account surplus declined from 5.2% of GDP in 2011 to 3.7% in 2012.
The stalled FDI inflows can partly be attributed to a combination of weakness in the global economy and Russia’s poor business climate so far. We still suggest that it is time to deliver on the institutional level to increase the FDI stream. At the same time, favorably smaller FDI and portfolio investment outflows might be due to narrower CA surplus, as we think that the CA and financial account balances are moving in a tandem. On the outflows side, dubious operations together with net errors and omissions represent 63% of the CA surplus (vs. 43% in 2011). This again highlights the rising vulnerability of Russia’s BoP to swings in oil prices. We believe that the outflows problem in this part needs to be addressed by improving the business climate (especially, in customs and tax administration) and undertaking anticorruption and