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Trade surplus started declining in February

According to the CBR, the trade surplus in February edged down to USD 15.9bn (from USD 17.7bn in January), contracting 21.4%in annual terms. Exports continued to decline, with the contraction intensifying to 7.2% YoY and slid into the red in MoM SA terms: -0.7%. Annual imports growth moderated from a surprising jump of 10.0% in January to 4.4%, but dropped -0.9% MoM SA (from 2.3% MoM SA a month ago).

Although softer imports growth (and we see this moderation as a correction after the significant increase in January) was supportive for the trade surplus during the reported period, the scale of the drop in exports surpassed this positive factor and facilitated the narrower surplus. Exports of the major items contracted both YoY and MoM (being seasonally adjusted). This can partly be explained by the YoY decline in oil prices (Urals was down 3.6% YoY in February) as well as the warmer weather in Europe (which was a significant drag on gas exports, which were down a quarter).

The February data on the external balance is likely to mark the beginning of a gradual moderation in Russia’s trade surplus, as we do not see any possibility for it to exceed January’s level until oil prices pick up.

As far as March is concerned, the colder weather in Europe might have spurred gas exports (after the drop in February). This, coupled with slower imports (according to the customs statistics on non-CIS imports), likely helped the trade surplus. However, lower oil prices last month have narrowed the exports and trade balance, in our view. To sum up, we expect March to print a weaker external trade surplus than in February. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

CBR, dollar, Europe, oil, gas

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