Despite sanctions, Russian economy posts record current account surplus in Q1

[beijingwalker]

Despite sanctions, Russian economy posts record current account surplus in Q1​

By János Ammann | EURACTIV.com
April 12, 2022

High energy prices and continued purchase of Russian gas and oil in the first quarter of 2022 allowed Russia to post the highest current account surplus in recent history, indicating that EU sanctions against the country have only limited effect.

According to figures from the Central Bank of Russia, the country exported goods and services worth $58.2 billion more than the value of its imports, surpassing more than two and a half times the current account surplus it had in the first quarter of 2021.

In the past 12 months, the Russian current account surplus totalled $157.8 billion. This is a higher current account surplus than in any previous year, according to data from the World Bank.

Russian Current Account Surplus Q1 2022


The current account surplus appears to be pushed by the continuing high gas and oil prices, allowing Russia to command a higher price for its own fossil fuel exports that a number of EU countries continue to buy.

While the US banned Russian energy imports, the EU has not restricted the purchase of Russian energy in the short term, as some member states are highly dependent on Russian fossil fuels.

The EU is planning to phase out the imports of Russian coal within four months, but the value of Russian coal only amounts to about 4% of the value of EU imports of Russian gas and oil.

At a meeting on Monday (11 April), foreign ministers of EU member states discussed but did not agree on an oil embargo.

“We do not want to take sanctions that hurt the EU more than they hurt Russia,” EU officials repeatedly say when asked about the European hesitation to take further sanctions.

While Russian energy deliveries are important to many member states, they are also the most important lever the EU has over the Russian economy as the figures below show.

Data by Eurostat. Chart by Esther Snippe.

The continued purchase of Russian energy also supports the Russian ruble. After the US and the EU sanctioned the Central Bank of Russia on 28 February, the national currency took an initial plunge in foreign exchange markets.

But capital controls imposed by the central bank as well as the steady inflow of foreign currency due to the energy exports helped the ruble recover close to levels from before 24 February, when Russia started its invasion of Ukraine.

“The ruble is strengthening due to exceptionally high foreign exchange inflows from energy sales, tight capital controls on ruble convertibility, and low market liquidity,” the deputy chief economist at the Institute of International Finance, Elina Ribakova, wrote in a recent analysis.

While the exchange rate is not set by the free market, the ruble’s stability was nonetheless “real” because it was “driven by Russia’s all-time-high current account inflows,” she argued.

Moreover, Ribakova pointed out that the sanctions would have to be adjusted over time to continue to hurt the Russian economy.

The development of the RUB to EUR exchange rate over the past six months. The values on the y-axis are in 100 RUB. [UBS]
Any adjustment that would seriously hurt the Russian economy would have to address the Russian state’s ability to finance itself through energy exports.

In the past week, the European Parliament approved a motion to ban Russian energy imports by a large majority.

“Our energy addiction, our money, allows the killing of Ukrainians,” the liberal member of Parliament Luis Garicano said, arguing for the ban. “Is it not clear that our gas is tainted with blood and that the guilty are we who finance this monster?” he added.

However, the Parliament has no formal power to decide on such an import ban, which would have to be approved by EU member states.

The European Commission, meanwhile, maintains that the EU sanctions are effective.

“The EU sanctions are crippling the Kremlin’s ability to finance the war,” a Commission spokesperson told EURACTIV in emailed comments, adding that “we continue to work on further sanctions”.

Despite sanctions, Russian economy posts record current account surplus in Q1

High energy prices and continued purchase of Russian gas and oil in the first quarter of 2022 allowed Russia to post the highest current account surplus in recent history, indicating that EU sanctions against the country have only limited effect.

www.euractiv.com

 

[Viet]

Oil embargo is coming.

 

[beijingwalker]

Oil embargo is coming.

I doubt if the west still has any strength left to hold up the gun to shoot their own head again.

 

[mmr]

Oil embargo is coming.

That will hurt poor countries of asia and African then rich Europe

Most developing countries already under pressure with FX

Europe will be fine but i am afraid we will see more countries go bankrupt like sri lanka did if oil goes to 200

at the end poor countries sufferings the most because of high food and fuel prices

 

[Viet]

I doubt if the west still has any strength left to hold up the gun to shoot their own head again.

Wait and see
The west is waging a total economic war against Russia no matter the cost.

That will hurt poor countries of asia and African then rich Europe

Most developing countries already under pressure with FX

Europe will be fine but i am afraid we will see more countries go bankrupt like sri lanka did if oil goes to 200

at the end poor countries sufferings the most because of high food and fuel prices

The sooner this war ends the better.
Otherwise half of world population will starve.
That’s the reason why the West increasing the costs on Putin.

 

[beijingwalker]

Wait and see
The west is waging a total economic war against Russia no matter the cost.

We have no objections if they did shoot their heads twice, China is just a spectotor.

 

[UKBengali]

This will continue as EU will import Russian oil and gas till 2027.

By then the war will be well and truly over and the Russians will have found alternative export markets in the "Global South".

These Western sanctions are the dumbest ones in history as the West is suffering more than anyone else!

 

[mmr]

Wait and see
The west is waging a total economic war against Russia no matter the cost.


The sooner this war ends the better.
Otherwise half of world population will starve.
That’s the reason why the West increasing the costs on Putin.

Yes but it will screw up poor countries. vietnam will be ok. you guys export lot.

think of poor week countries who's fx already low..

biggest losser is russia but also africa middle east and countries in south asia.

 

[beijingwalker]

Yes but it will screw up poor countries. vietnam will be ok. you guys export lot.

think of poor week countries who's fx already low..

biggest losser is russia but also africa middle east and countries in south asia.

Biggest loser is EU.

 

[mmr]

Biggest loser is EU.

Nope.

Biggest looser is Russia, followed by poor countries who spend lot more on fuel and food. EU is rich. Poorest eu country like Bulgaria per capita income is 12k lot more then any developing country.

The invasion of Ukraine is supercharging food insecurity in the Middle East and North Africa - Greenpeace International

Russia’s invasion of Ukraine is accelerating a global food crisis. In the Middle East and North Africa where I live, a region that includes already-fragile countries like Syria, Lebanon and Yemen, many households are struggling against soaring food prices.

www.greenpeace.org

 

[beijingwalker]

Nope.

Biggest looser is Russia, followed by poor countries who spend lot more on fuel and food. EU is rich. Poorest eu country like Bulgaria per capita income is 12k lot more then any developing country.

The invasion of Ukraine is supercharging food insecurity in the Middle East and North Africa - Greenpeace International

Russia’s invasion of Ukraine is accelerating a global food crisis. In the Middle East and North Africa where I live, a region that includes already-fragile countries like Syria, Lebanon and Yemen, many households are struggling against soaring food prices.

www.greenpeace.org

Food security is always bad in poor countries, the war will indeed worsen their situation, but across the board, relative speaking, EU is being hit very hard if not the hardest.

 

[mmr]

Food security is always bad in poor countries, the war will indeed worsen their situation, but across the board, relative speaking, EU is being hit very hard if not the hardest.

Nothing is worse then food security and fuel shortage.

In west ppl will take less vacation maybe wont change to a new car etc because of inflation. or eat out less.

In poor countries we are talking about dying in hunger.

Ukraine war threatens to push 1.7 billion people across the world into hunger and poverty

The war could throw more than one-fifth of humanity into poverty, destitution and hunger on a scale not seen in decades.

www.usatoday.com

 

[hualushui]

Oil embargo is coming.

 

[Viet]

Food security is always bad in poor countries, the war will indeed worsen their situation, but across the board, relative speaking, EU is being hit very hard if not the hardest.

Instead of 3 holidays the EU folks make 2 holidays per year. That is still ok. Meanwhile you support Putin. He causes wide spread poverty, mass hunger in large part of Latin America, Africa and Asia. Have no shame?

 

[beijingwalker]

Instead of 3 holidays the EU folks make 2 holidays per year. That is still ok. Meanwhile you support Putin. He causes wide spread poverty, mass hunger in large part of Latin America, Africa and Asia. Have no shame?

China never supports any wars, China is against Nato expansion and western provocation which directly caused this war. Ukraine war is the last thing China wants to see.