Russia: Contraction in exports lessens considerably in July
August 30, 2016
In July, Russian exports totaled USD 23.5 billion, which was down 13.9% from the USD 27.3 billion recorded in the same month last year (June: -19.8% year-on-year) and represented the softest decrease in 21 months. Imports totaled USD 16.2 billion, which marked a 2.9% annual decrease and the fourth consecutive single-digit contraction after 18 months of double-digit decreases.
Russia’s trade surplus totaled USD 7.3 billion in July, slightly below the USD 8.1 billion registered in the previous month. On an annual basis, the trade surplus in July was significantly below the USD 10.6 billion surplus recorded in the same month last year. Still, July’s result prompted the 12-month rolling surplus to decrease to USD 101 billion, which was the smallest accumulated surplus registered in nearly a decade.
As the dust settles following the Brexit vote, oil prices have begun to rise. After a bear market in most of July, global prices began to rally in August mainly on the back of a drop in inventories, which suggests a gradual rebalancing of the market. Prices were also pushed up by speculation that some major producers are in talks to coordinate a freeze in production in order to support prices. However, it remains to be seen if these talks will bear fruit. In Russia, the government postponed plans to sell a 50.08% stake in the oil firm Bashneft as part of a broader privatization program designed to cover part of the fiscal deficit this year. The prices of Urals oil settled at USD 45.8 per barrel on 30 August, which was 16.0% higher over the same day in the previous month. Urals oil has recovered about 30% since the beginning of this year and prices are nearly 3.0% lower on an annual basis.
Author: Ricardo Aceves, Senior Economist