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Trade surplus

According to the CBR, the trade surplus in August picked up a bit and increased to USD 13.8bn (from USD 13.3bn in July), the highest level this summer. The annual growth in exports slowed to 2.3%, normalising from 5.5% in the previous month, and added 0.9% in MoM SA terms. The annual growth in imports plunged into the red again, with a drop of 5.3% (after 1.5% growth in July) and the growth in MoM SA terms stayed below zero (although printing a softer decline of 2.2% vs. 2.9%).

The August trade report showed that the SA external trade surplus continued expanding (as we have acknowledged since May 2013) owing to quite stable SA exports coupled with SA imports losing momentum.

Until oil declines (our baseline scenario), the SA trade balance will not narrow, we believe, as imports will be contained by weaker local demand amid slower growth in wages, decelerating retail lending and rising unemployment.

Under our base case scenario, oil is to fall by the end of this year and pull down export volumes, limiting any further expansion in the trade surplus and in inherent advantages for RUB. This might be smoothed by a further increase in gas (in August, the exports structure reveals that gas exports kept gathering pace, while the growth in other energy exports is not that encouraging) and reviving growth in metals exports, given the tentative signs of the commodity cycle bottoming out.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst

CBR, dollar, ruble

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