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1Q13 BoP preliminary data reveals rising dependence on oil


According to the CBR, during 1Q13 the CA surplus declined a third YoY to USD 27.9bn (although it doubled QoQ). The trade balance narrowed 15% YoY to USD 50.1bn on lower exports (-5% YoY to USD 125.7bn) and stronger imports (+4% YoY to USD 75.7bn), while deficits of other CA items have expanding, tapering off the CA surplus.

The capital and financial account deficit narrowed 24% YoY to USD 22.4bn. Notably, the volume of financial outflow from Russia visibly expanded: 2.0x in banks and 1.5x in the corporate sector. Inflows of FDI into the corporate sector were up more than twofold from 1Q12 to USD 31.5bn, but outflows of FDI surged to a greater extent.

Outflows in dubious operations edged down to USD 8.7bn from USD 9.9bn in 1Q12 and USD 11.8bn in 4Q12.

The CBR’s first estimate of 1Q13 shows that the CA surplus continued to shrink on a narrower trade balance and the gradual expansion of deficits in services, investment incomes and other CA non-trade balances. Importantly, the breakeven oil Urals price for the CA balance picked up to around USD 86/bbl, from USD 83/bbl in 1Q12. This highlights the increasing vulnerability of Russia’s economy to the oil market. It also underpins our call that until, oil quotes rise, RUB will be under greater pressure in the months to come along with the CA seasonality becoming less favourable. We are reiterating our RUBBASK year-end forecast of 37.0.

On the capital outflow front, according to our estimates based on the CBR’s data, in 1Q13 net private capital outflow softened YoY to USD 25bn, from USD 33bn in 1Q12. This again supports our view that the CA and financial account balances are moving in tandem. Hence, as we expect a lower CA surplus in the coming quarters, capital outflow might also automatically stick to a downward path. It is also worth noting that capital outflow classified as dubious operations shrank in 1Q13 (positive from the business climate perspective).

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

CBR, oil

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