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.
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