Russia dwindling current account surplus: causes & consequences

Despite continued high oil prices, Russia’s current account surplus has fallen from around 7% of GDP prior to the 2008/09 crisis to around 2% now and is on track to slip into a deficit by 2015. Given its large foreign currency reserves, Russia could afford to fund a small shortfall for a while. But the changing current account dynamics will have implications for the economy and for markets. The consequences will be a period of weaker domestic demand growth and continued downward pressure on the ruble.