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. Last Updated: 07/27/2016

Deficit Expected by 2010

The current account surplus will shrink by less than expected this year because of high oil prices but will turn negative by 2010, a senior Economic Development and Trade Ministry official said Wednesday.

"The current account surplus is narrowing quickly. If last year it was $96 billion, then our preliminary forecast for this year is around $78 billion," said Andrei Klepach, head of the ministry's forecasting department.

"That [this year's surplus] is larger than we forecast is in large part due to high oil prices," Klepach added, forecasting that the trade surplus would fall to $130 billion this year from $140 billion in 2006. He said the Economic Development and Trade Ministry saw the average oil price at $74 per barrel in 2008 compared with $69 for 2007.

A consumer boom and industry retooling have fuelled imports growth of 36.3 percent in the first nine months of this year, while exports rose by just 10.4 percent as oil output growth slows.

Klepach forecast that imports would grow for the full year by 36 percent but cautioned that the pace of their growth would slow to 10 to 11 percent by 2010. "The trade balance will narrow by 2010 to around $13 billion, and in 2011 it could already be negative," he said, adding that the current account would already slip into negative territory in 2010.

"We get a figure of minus $30 billion to $36 billion, depending on debt service dynamics," he said. "But for now, the situation looks better than we expected."

Klepach said net private capital inflow would reach $75 billion to $77 billion in 2007 compared with $40.9 billion last year. The Finance Ministry forecasts capital inflow of $80 billion.