Russia's economy takes a hit as its current-account surplus crashes 85% compared to last year

• Russia's current account surplus dropped 85% from January to July 2023 compared to the same stretch last year.
• That surplus reached a record high in 2022 as oil and gas exports boomed amid war in Ukraine.

Russia's economy has struggled to keep growing as its war with Ukraine drags on, and central bank data showed Wednesday that its current account surplus saw an 85% year-over-year decline from January to July.

The current account, which is a measure of the total money flowing in and out of the country for trade and investments, surged to $165.4 billion in the six months to July 2022. When Russia launched its "special military operation" in Ukraine last February, the country kept its oil and gas exports flowing, which allowed foreign payments to continue lining its coffers.

Those energy revenues, however, have since tumbled, down 41% year-over-year for the first seven months of 2023. The latest data show Russia's current account is now at $25.2 billion, which reflects the heavy toll that war and Western sanctions have had on the economy.

Still, the annualized figure was up slightly from the prior six-month stretch.

The government press release noted that Russia has seen a 68.4% drop in the trade surplus year-over-year, which pulled the current account figures lower.

The central bank pointed to a decrease in total export volumes and a decrease in global prices for Russia's key commodities compared to last year. Additionally, it highlighted that the total deficit in primary and secondary income in January to July 2023 reduced mostly due to a decline in dividends collected by Russian companies "in favor of non-residents."

To be sure, even with the US and other Western partners shunning trade with Russia, China and India have stepped in as big buyers of Russian oil. But steep discounts and lengthy shipping routes have limited those sales from providing a meaningful economic boost.

Moscow has maintained a relatively upbeat stance on the war and its economy, but under-the-hood data like retail sales, airline activity, and car sales point to a much bleaker landscape.