Russia's ruble drops 35%, current account surplus plunges 93%

Five data points on the Russian collapse, and what is left out of focus

The Russian economy is crumbling. The five facts supporting this diagnosis are concrete, dated, and verifiable. The problem is that none close the story alone: while the current account surplus plunged 93% in a quarter, the Russian central bank still projected growth for the full year. Both can exist in the same country.

The five data points supporting the thesis

The review is this: the ruble, the current account, oil and gas revenues, car sales, and the exodus of people and capital. The ruble has lost more than 35% in the last year and 6.8% in the last month, with a particularly delicate episode during the Wagner Group’s attempt in June, when the currency hit its lowest level in fifteen months against the dollar. The scene —citizens hastily changing savings— is the closest thing to panic Moscow has seen since the start of the war.

How much has Russia's current account surplus fallen?

93%. Between April and June, the country recorded a surplus of $5.4 billion, compared to the record of $76.7 billion in the same period last year. The data is signed by the Bank of Russia itself, which attributes it to a drop in the physical volume of exports and deteriorating commodity prices. Translated: less is sold, and sold cheaper. The most widespread interpretation is that energy benefits no longer prop up the economy as before, and securing imports has become a problem.

From 40% of European gas to the Asian discount

The Russian Ministry of Finance stated in June that revenues from oil and gas taxes fell 36% year-on-year, and profits from crude oil and derivatives dropped 31%. Before the war, Russia supplied nearly 40% of the European Union’s natural gas imports and a quarter of its crude. These figures have dropped to near zero. China and India have filled the gap, but at a fire-sale price: Moscow sells at huge discounts what it previously placed at market price.

How many cars and how many brains has Russia lost?

Before the invasion, about 100,000 units were sold per month nationwide. Now, approximately a quarter are sold, not just due to price hikes or a collapse in consumer confidence: supply is lacking. In parallel, millions of Russians have emigrated. Only Uzbekistan has received more than 400,000. The trail of this brain drain appears in transfers to Armenia, Georgia, or Kyrgyzstan, countries not listed in any financial hub registry. Nothing alarming, if one does not look at the detail.

Who signs the data and with what method

The original package comes from Business Insider and relies on figures shared by a leadership institute at Yale University, with researcher Jeffrey Sonnenfeld as the main source for the capital flight part, and statistics from the Bank of Russia and the Ministry of Finance for the rest. These are serious sources.

The counterattack: what the numbers left out of the narrative say

Here the diagnosis cracks. Russia’s economic contraction in 2022 was “only” 2.1%, below what the International Monetary Fund, the World Bank, and half a dozen analysis firms predicted for months. The key, it is argued, lay in the Bank of Russia’s response and revenues from oil, refined products, and gas. Some add two uncomfortable nuances: ruble exchange rates against the yuan and rupee have moved within usual margins of the last decade, and the US balance sheet hardly invites giving lessons.

There is also a calculation on brain drain that reshuffles the scale. Spain loses between 300,000 and 500,000 emigrants annually out of 45 million inhabitants, around 0.9% of the population. Russia’s 400,000 represent 0.28%. In relative terms, the country that remains loses more.

What does not fit in either version

Indiana University Economics Professor Volodymyr Lugovskyy draws the extreme scenario: Russia could break into several pieces like the Soviet Union, and argues that this would not necessarily be bad for the rest of the world because the country now functions as a centralized power empire. On the other side, the thesis of terminal collapse encounters a methodological problem: the chosen indicators are the worst available, and the sanctions calendar is already on its fortieth quarantine.

Underlying this is a question neither trench answers comfortably: what exactly does a wartime economy measure? Car sales data or transfers to Kyrgyzstan say much about consumption and confidence, and much less about the capacity to sustain a military effort for years.

What to expect

If anything the last year and a half teaches is that forecasts on Russia have systematically failed in the direction of Western optimism. The forecast, with caution first: welfare indicators will continue to fall, aggregate figures will hold up better than the headline suggests, and the gap between the two —from citizen to state— will remain the true thermometer. No one has yet found a way to measure it.