June 24, 2024

Russia Saw Net Capital Outflows of $239B in 2022

  • Russia could see $239 billion in net capital outflows – ie assets leaving – in 2022, according to a think tank.
  • The outflow was four times greater than in 2021 and 70% greater than during the GFC in 2008.
  • It is likely that some of the capital would leave for neighboring countries, where some Russians fled to.

It is not only Russians who are leaving their homeland, a large amount of capital has left the country after the invasion of Ukraine.

Russia saw an unprecedented $239 billion in net capital outflows in 2022 amid the war in Ukraine, according to a Monday report from the Council. Center for Macroeconomic Analysis and Short-Term Forecasting, a think tank based in Moscow. According to Investopedia, refers to capital outflow movement of assets out of a country.

This significant outflow is even greater than Greece’s GDP of $219 billion in 2022, according to World Bank data.

In contrast, Russia’s current account surplus – which means A country’s exports eclipse its imports — hit a A record $227 billion in 2022 as revenues from the country’s oil and gas exports soared and imports dwindled due to sweeping sanctions over the Ukraine war.

Last year’s capital outflows were four times greater than in 2021 and 70% greater than in 2008 amid the Global Financial Crisis, according to the analysis. Another $27 billion has flowed out of Russia so far in the first half of 2023, the report says. The insider could not independently verify these numbers.

The outflows out of Russia are not about transferring money out of the country. They would also cover investments abroad.

But it’s not just Russia – emerging markets, in general, have been increasingly exposed to capital outflows in the past year as the US dollar strengthened against local currencies, Bloomberg reported in September 2022.

It is likely that some of the capital outflow will be left to neighboring countries, where some Russians fled to, after the start of the war in Ukraine.

The Russians transferred about $1.75 billion to Armenia in 2022, Martin Galstyan, the country’s central bank governor, said in January. Reported on News.am of Armenia. Money transfers from Russia to Georgia increased fivefold, from $411 million in 2021 to $2.1 billion in 2022, according to data from the central bank of Georgia.

Many of these Russians landed in neighboring countries, establishing new lives and businesses, and eventually boosted the economies of these nations, an independent Russian media outlet. Novaya Gazeta reported on Friday.

Although the Russian economy appeared to be holding up during the first year of the Ukrainian war, the situation has gone from bad to worse because of stifled exports, a weak ruble, and now, tremendous capital outflow.

In fact, Russia’s current account has fallen by 93% since last year, ie Insider reported on July 13.

“It’s a slow burn,” said Timothy Ash, associate member at Chatham House’s Russia and Eurasia program, the UK Telegraph media outlet reported on Monday. “As time goes on, it gets harder for them. They’re going to have to make choices, guns versus butter.”

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