Russian Posts Smallest Current-Account Surplus Since 1998

Russia’s current account, the broadest measure of trade in goods and services, slid to the smallest surplus since 1998, undermining support for the currency of the world’s largest energy exporter.

The central bank reduced its estimate for the third quarter surplus to $629 million from $1.1 billion reported in October, according to data published today on its website. Economists had projected a surplus of $8 billion before the first reading in October, according to the median estimate of 7 estimates in a Bloomberg survey.

Russia, whose economy is expanding at the weakest pace since a 2009 recession, had the smallest current-account surplus since deficits in the first two quarters of 1998, according to data compiled by Bloomberg. In the third quarter of that year, the government defaulted on $40 billion of domestic debt and devalued the ruble.

“The narrowing current-account surplus means support declining further for the ruble,” Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said by e-mail before the report. “The pace at which the ruble weakens in the future will depend on what conditions the government creates to reduce capital outflows and turn them to inflows.”

The ruble tumbled 7.4 percent against the dollar this year, according to data compiled by Bloomberg. The currency is forecast to depreciate 1.1 percent to 33.19 per dollar at the end of the first quarter from 32.835 at yesterday’s close in Moscow, according to the median estimate in a Bloomberg survey.

Outflows, Deficit

The ruble faces additional pressure as the the government forecasts $25 billion in net private capital outflows next year and a budget gap of less than 1 percent.

Bank Rossii today also revised its second-quarter estimate to a surplus of $2.6 billion from $3.4 billion, while raising the first-quarter surplus to $25.06 billion from $25.03 billion, the data showed.

Russia’s current account balance is declining even after prices for Brent crude, the benchmark for its Urals blend, averaged more than $109 a barrel last quarter, compared with about $13 in the same period of 1998, data compiled by Bloomberg show.

“Now it’s a purely domestic story,” Polevoy said. “There’s no real diversification of exports, while every other component of the current account is steadily deteriorating.”

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