Russia: Exports fall at double-digit rate in June for eighth consecutive month, oil prices resume fall
July 29, 2015
Exports totaled USD 30.3 billion in June, which represented a 25.5% contraction (May: -29.9 year-on-year) over the USD 40.7 billion registered in the same month last year. The reading marked the eighth consecutive contraction at a double-digit rate. Meanwhile, imports registered USD 16.5 billion in June, which were 38.3% down the USD 26.7 billion registered in June 2014.
As exports continued to contract less incisively than imports, the trade surplus remained virtually unchanged in June. The trade surplus totaled USD 13.7 billion in June, which was virtually unchanged from USD 13.9 billion observed in the same month last year. That said, the accumulated trade surplus continues to shrink. In the 12 months up to June, the trade surplus registered USD 176 billion (May: USD 176.3 billion), which narrowed over the USD 192 billion surplus registered in the same period last year.
Following a stable period in the past weeks, the price of Urals oil—Russia’s main commodity—began to fall again. At the end of July, the price of the commodity traded at USD 52.9 per barrel, which was 12.1% lower than the USD 60.3 per barrel observed at the end of June. In annual terms, the price of Urals oil at USD 52.9 per barrel is half the price registered than at the end of July last year. The fall in Urals oil prices followed that of global oil prices. The recent drops reflect a combination of factors. Among these factors are the recent turbulence seen in the Chinese equity markets, which raised concerns about economic growth in the world’s second largest economy and world’s top oil importer of crude. In addition, market participants continued to price in the persistent supply glut in global markets. Regarding oil output, analysts pointed to growing supply from large producers in the Middle East, where oil production has reached record levels.
The Russian Central Bank published its assessment of the country’s economic outlook, where it sees two scenarios. Under a baseline scenario, the Bank expects the price for Urals oil to average USD 80. Under a worst-case scenario, the Bank sees oil prices averaging USD 60.
Author: Ricardo Aceves, Senior Economist