Russian President Vladimir Putin.
GAVRIIL GRIGOROV/SPUTNIK/AFP via Getty Images
Russia’s current-account balance has collapsed, in another blow to the floundering economy.
The nation’s surplus tanked 93% to $5.4 billion last quarter from a year earlier, Bank of Russia data show.
That comes as Western sanctions squeeze Russia’s energy exports.
Russia’s economic woes are worsening, with the latest blow coming in the form of a collapse in its current account.
The nation posted a current-account surplus of $5.4 billion for the April-June quarter, which marks a 93% plunge from a record $76.7 billion in the same period of 2022, Russia’s central bank data show. That’s also the smallest excess since the third quarter of 2020.
It shows the heavy blow that Western economic sanctions – imposed on Moscow in response to its war on Ukraine – have dealt to the country’s economy, by squeezing its energy exports.
The worsening trade dynamics are also reflected in the plunging fortunes of the ruble. The Russian currency tumbled to a 15-month low of around 94.48 per dollar earlier in July, hit hard by the country’s weakening terms of trade.
“The decline in the surplus of the balance of the external trade in goods in January – June 2023 compared to the comparable period of 2022 was caused by a decrease in both the physical volumes of export deliveries and the deterioration in the price situation for the basic Russian export commodities, energy commodities made the most significant contribution to the decline in the value of exports,” the Bank of Russia said.
Moscow’s key source of revenue is through sales of its oil and gas products, but price caps and bans imposed on Russia’s energy exports by a pool of nations following its unprecedented attack on Ukraine, have meant its commodities business has taken a huge hit.
In June, Russia’s Finance Ministry revealed that revenue from oil and gas taxes fell 36% compared to a year ago to about 570.7 billion rubles, while profits from crude and petroleum products tumbled 31% to 425.7 billion rubles.
Market commentators have weighed in on Russia’s battered economy, with Yale researchers claiming President Vladimir Putin is cannibalizing the nation’s economy in his mission to seize Ukraine.