That was the trend this year through Friday.
I continue to think that the biggest distortion in the world economy comes from the fact that the countries with the biggest “oil” current account surpluses (the key Gulf countries) have pegged to the slumping dollar – as has the country with the biggest non-oil current account surplus (China).
Saudi reserve growth (using total foreign assets rather than narrow reserves) in April was surprisingly low -- $2.4b. That is well below the roughly $7.5b monthly pace in the first three months, even though oil was a lot stronger in April. I don’t know enough to know why. Clearly it was not a shortage of cash. Never fear, Russia continued to pile up its reserves. It added $17.4b to its reserves between the end of April and the 26th of May. Its China-like pace of reserve accumulation continues.
And Russia’s reserve growth in April and May – over $15b a month -- gives some indication of scale of the monthly flows coming into Saudi Arabia. The Saudis, after all, have more oil and fewer people than Russia. And if you add up the other small Gulf countries, they combined are probably adding a comparable sum to their investment authorities accounts.
That’s real money. And apparently not all of it is flowing back to the US …