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Commerzbank’s Tatha Ghose reports Russia’s June merchandise trade surplus rose to USD 12.5bn, up over 50% year-on-year, as higher Oil prices and improved Urals pricing supported exports. IMF trade data confirm a jump in exports and surplus by April, but he cautions the improvement is not trend-altering and may fade as export prices ease. With USD/RUB only weakly tied to fundamentals, he expects continued Ruble depreciation over the coming year.
Oil-driven trade gains lack durability
“Russia’s June merchandise trade data show that the rise in the oil price and better Urals price realisation since March began to have a positive effect on the trade balance since around April. According to the latest official data, the merchandise trade surplus reached USD 12.5bn in June (up by 52.3%y/y).”
“We still choose to showcase the IMF’s Direction of Trade Statistics for trends in Russian trade (as opposed to local Russian statistics, whose reliability became questionable – partly because of stated official policy – since the Ukraine war began). The IMF data are delayed, which means that the latest available data are for April rather than June. Still, one can observe the effect already by April.”
“The up to date official data suggest that the trade balance has not improved much further since then and may, in fact, begin to fade in July as the oil export price begins to average lower. Crucially, our chart shows that the trade balance improved to a multi-year high, but did not really increase to a level beyond what Russia had enjoyed in preceding years.”
“In this sense, the development is not “trend altering” although better Urals pricing did help the Russian economy. The USD/RUB “technical fix” began to drift up around the same time because the geo-political environment deteriorated, while the exchange rate has only a weak link to underlying trade fundamentals. We expect the ruble to keep depreciating over the coming year.”
