Russia's economy faltered during the first full month of war with Ukraine, but it could enjoy a healthy financial position if some of its largest trading partners do not halt energy exports.
Despite all the difficulties faced by consumers at home, and the financial restrictions imposed on the government from abroad, "Bloomberg Economics" expects that Russia's revenues from energy exports during 2022 will reach about 321 billion dollars, an increase of more than a third compared to 2021.
Russia is also on track to achieve a record current account surplus, which the Institute of International Finance says could reach $240 billion.
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"The single largest driver of Russia's current account surplus remains apparently strong...Despite the imposition of current sanctions, large inflows of hard currency into Russia are likely to continue," said economists at the Institute of International Finance led by Robin Brooks in a report.
However, the calculation could change completely in the event of a ban on energy sales. Even without that, Russia's oil exports and production are already declining, with the International Energy Agency forecasting that it could lose nearly a quarter of its crude production during the month of April.
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Many of Russia's traditional customers are also looking for energy elsewhere, choosing not to sign new contracts for Russian supplies, amid widespread condemnation of President Vladimir Putin's aggression against Ukraine, while other customers, such as India, are getting steep discounts in return for their purchase.
The invasion of Ukraine shocked Germany and its European Union allies, sending them into a fundamental shift in energy policy, as the bloc rushes to reduce its dependence on Russia.
German opposition
For now, Europe's largest economy is opposed to sanctions or political pressure that could lead to a complete energy ban. Only a few countries - including the US and UK - have imposed outright bans on imports from Russia.
Oil and gas account for about half of Russia's exports, and they contributed about 40% of last year's budget revenue.
“Hydrocarbon revenues are the lifeblood of the Russian economy, helping mitigate the impact of harsh sanctions and averting a balance of payments crisis,” said Scott Johnson, an analyst at Bloomberg Economics. “But even without an energy embargo, inflation is skyrocketing, and looming A deep recession is on the horizon.
However, the combination of a sharp depreciation of the ruble and a rise in the dollar price of oil, will bring an additional 8.5 trillion rubles ($103 billion) in budget revenue through 2022, according to TS Lombard.
“The Ministry of Finance will use a portion of this additional revenue to cushion the impact but cautiously, not to raise more inflation,” said Medina Khrustaleva, an analyst at TS Lombard in London. “It looks like all of these sanctions will destroy the non-energy part of the economy. Russia will adopt more energy.”
possible collapse
Although the standoff over Ukraine has disrupted energy shipments, the shock to imports and domestic demand will be so severe that the current account, the broadest indicator of trade and services, may reach a new historic high after hitting $120 billion in 2021. .
Goldman Sachs, which raised its forecast for a current account surplus in 2022 to $205 billion, says it may be enough for the Russian Central Bank to meet the private sector's demand for foreign exchange, and eventually allow it to ease restrictions on capital movement.
With Russian consumers already subjected to a barrage of shocks, including inflation and income erosion, Goldman Sachs economists predict a 20% collapse in imports through 2022, twice the expected drop in exports.
Energy Ban
A healthy financial position will not save Russia from facing a deep recession, but it does help maintain government spending at a time when the government does not have access to international capital markets.
TS Lombard analysts said the ruble exchange rate is effectively backed by current inflows, after sanctions froze much of the central bank's international reserves.
Russia's ability to sell oil and gas abroad may be the only thing preventing the economy from slipping into its worst financial crisis.
The Institute of International Finance, a consortium of the world's largest financial institutions, said an energy ban by the European Union, the United Kingdom and the United States would lead to a contraction of more than 20% in GDP and could cost Russia up to $300 billion in export earnings. , according to price fluctuations.
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