Russia: Large external surplus in 2018, set to narrow in 2019

First estimates indicate that the annual current account surplus increased to +USD115bn in 2018, equivalent to an estimated +7.6% of GDP, up from +USD33bn in 2017 (+2.2% of GDP). Higher oil prices supported the outcome in 2018, boosting oil and gas exports by +35%. Meanwhile, non-oil and gas exports increased by +14%, but a slowdown to +7% y/y in H2 2018 indicates that new U.S. sanc­tions may have had an impact on the performance. Overall, goods exports reached USD443bn in 2018, up by +USD89bn or +25% y/y, while imports grew by just +USD11bn (+5%) to USD249bn, in part due to the weaker RUB (-7% vs. the USD in 2018). We expect that slightly lower average oil prices in 2019 (we forecast USD69/bbl for bench­mark Brent, after USD72/bbl in 2018) combined with the impact of further U.S. sanctions will narrow the current account surplus to about +4% of GDP this year. Mean­while, net capital outflows amounted to -USD68bn in 2018, a four-year high, though well below the record highs of -USD153bn in 2014 and -USD134bn in 2008.