Yesterday, the CBR published a preliminary BoP estimate for 1Q14.
The current account surprised on the upside, with the surplus rising 13.6% YoY to USD 27.6bn in 1Q14. Following recent revisions to the quarterly estimates, this was the third consecutive quarter of the improving sequential (i.e. seasonally-adjusted) trend, with the CA surplus now hovering around 2.4% of GDP.
While the huge headline net private sector capital outflow figure of USD 63.8bn came as little surprise, the details are more interesting, bringing further evidence that the underlying picture might be improving:
'Grey’ capital flight – which we define as the sum of dubious operations and errors and omissions – almost halved YoY to USD 8.4bn in 1Q14.
Adjusted for paper capital flows (i.e. reinvested earnings) and the Rosneft deal in 1Q13, we estimate that the net FDI balance reversed its nascent rising trend and dipped into the negative area (-USD 5.6bn in 1Q14 vs. +USD 11.3bn last year).
The most significant capital outflows in 1Q14 were related to the dollarisation of savings. First, household demand for FX cash spiked to USD 19.6bn, the highest since 4Q08. Equally important, a whopping USD 35bn increase in banks’ foreign assets suggests that deposit base dollarisation (likely corporate) was nothing shy of the worst of the last crisis.