The Evolution of Russia’s Balance of Payments: From the Deficits of the 1990s to the Records of 2022 and the Challenges of 2023
The balance of payments is a crucial indicator of a country’s economic interaction with the global market. The current account, a key component of the balance of payments, reflects the balance of exports and imports of goods and services, investment transactions, labor income, and international transfers.
Russia’s balance of payments is affected by oil prices, international politics, macroeconomic conditions, and trade restrictions. Generally, rising oil prices foster the growth of export revenues and improvement of the balance of payments, which can influence the strengthening of the Russian ruble exchange rate. Nevertheless, it should be taken into account that the fiscal rule partially neutralizes the impact of the balance of payments on the Russian ruble exchange rate.
Russia’s Balance of Payments in the Post-Soviet Era: A 30-Year Retrospective
With few exceptions, since 1994, Russia’s balance of payments has recorded a positive current account balance. In the 1st and 2nd quarters of 2022, there was a record value of the current account due to a sharp increase in oil prices, with the balance exceeding $23-25 billion per month. The minimum value of the current account was in the 2nd quarter of the crisis-ridden 1998, amounting to a current-account deficit of $1.2 billion per month.
In the first quarter of 2023, there was a significant reduction in the current account to $6.2 billion per month, against the backdrop of falling oil prices and export restrictions. The first-quarter balance in the last 20 years has only been lower in 2016, 2009, and 2004. Amid the recovery of imports in the second half of 2022 and the reduction of export momentum due to restrictions, maintaining the previous level of the balance of payments presents a significant challenge for the Russian economy.
