Russia's deteriorating external position a sign that all is not well

Russia’s current account surplus declined over the course of 2013 and, for the first time since the 2008/09 crisis, became insufficient to cover capital outflows. Of course, with over $500bn in FX reserves, Russia’s balance sheet still looks strong. However, the deteriorating external position is yet another sign that the Russian economy is reaching the limits of its consumption-led growth model. The ruble looks set to weaken further over the next couple of years.