- Goldman, IIF expect record current-account surplus for Russia
- Embargo on energy exports can tip economy into deeper crisis
Russia’s economy has staggered through the first full month of the war with Ukraine but it may yet emerge with a sparkling balance sheet if some of its biggest trade partners don’t turn off the tap on its exports of energy.
For all the hardships visited on consumers at home and the financial chokehold put on the government from abroad, Bloomberg Economics expects Russia will earn nearly $321 billion from energy exports this year, an increase of more than a third from 2021. It’s also on track for a record current-account surplus that the Institute of International Finance says may reach as high as $240 billion.
“The single biggest driver of Russia’s current account surplus continues to look solid,” IIF economists led by Robin Brooks said in a report. “With current sanctions in place, substantial inflows of hard currency into Russia look set to continue.”
The calculus may change completely, however, in case of an embargo on energy sales. And even without it, Russia’s oil exports and output are already falling, with the International Energy Agency predicting it may lose nearly a quarter of its crude production this month.
Many of the country’s traditional customers are also looking elsewhere and choosing not to sign new contracts for Russian supplies amid widespread condemnation of President Vladimir Putin’s aggression. Others like India are getting steep discounts.
The invasion of Ukraine has shocked Germany and its European Union allies into a radical shift in energy policy, and the bloc is rushing to cut its dependence on Russia. For now, Europe’s largest economy opposes sanctions or political pressure that would prompt a full energy embargo. Only a handful of nations — including the U.S. and the U.K. — have imposed explicit bans on imports from Russia.
Oil and gas account for about half of Russia’s exports and contributed around 40% to last year’s budget revenue.
