Russian economy nightmare as Putin takes £5.5bn trade hit

 

Russia’s Economic Position Weakens as Balance of Payments Shrinks

Russia’s central bank has released fresh data revealing a sharp deterioration in the country's financial position, signaling intensifying economic pressure on President Vladimir Putin’s administration.

Between January and April, Russia’s positive balance of payments — the net flow of money into the country — fell by 31.7%, dropping to £15.7 billion. That’s a steep decline of £7.4 billion compared to £23.1 billion during the same period in 2024. Officials attribute the downturn to a weakening trade surplus and deeper deficits in both primary and secondary income categories.

Russia’s trade balance — the difference between exports and imports — also shrank significantly, down 15.9% year-on-year. According to Interfax, the surplus stood at £29.3 billion for the first four months of 2025, compared to £34.8 billion over the same timeframe last year.

Despite the broader decline, the Bank of Russia reported a short-term rebound in foreign trade earlier this year. From January to February, the trade surplus rose by £1.8 billion year-on-year, reaching £13.8 billion. This temporary increase was driven by higher exports, which rose to £23.3 billion in February, up from £21.8 billion in January.

Meanwhile, the services deficit — the gap between services exported and imported — narrowed by £822 million, falling to £1.2 billion. Analysts attribute the improvement to reduced spending by Russians on international travel.

In financial markets, the Moscow Exchange opened lower today. The MOEX index slipped 0.76% to 2,860.78 points, while the RTS index dropped to 1,120.71 points, according to trading data reported by TASS.

The decline followed a modest rally the previous evening, reportedly triggered by remarks from U.S. President Donald Trump after a phone call with President Putin. Trump indicated he might hold off on imposing stricter U.S. sanctions, citing a potential opportunity for peace in Ukraine. “I think there is a chance to do something, and if you do that [expand sanctions], you can make things much worse,” he told reporters.

Nevertheless, European leaders are moving forward with plans to introduce further economic sanctions against Moscow.