The outflow of capital from Russia since the beginning of the war reached a record $253 billion

After the outbreak of the war with Ukraine, the Russian economy experienced an unprecedented capital flight in recent history, despite sanctions complicating settlements with the outside world and currency restrictions imposed by the Central Bank of the Russian Federation.

The cumulative net capital outflow from the country from February 2022 to June 2023 amounted to USD 253 billion, according to the calculations of the Center for Macroeconomic Analysis and Forecasting (CMASF) and central bank statistics.

According to the CMASF, in 2022, $239 billion left Russia. – four times more than a year earlier (this amount includes USD 13 billion for pre-war January). In the first half of 2023, outflows amounted to an additional USD 27 billion.

In relative terms, the rate of capital outflow reached 13% of GDP and broke all possible records. So, in 2008, against the backdrop of the global financial crisis, and in 2014, after the annexation of Crimea, it was about 11% of GDP (about $ 150 billion a year). According to CMASF data, the rate of outflow from the real sector of the economy (non-financial enterprises) almost doubled last year – 10% of GDP compared to 5% of GDP on average in the previous 13 years.

“The net inflow of funds in the current account and the net outflow of funds in the financial account in 2022 reached unprecedented levels,” say CMASF experts.

Saving their savings from war and sanctions, Russian citizens withdrew $64 billion into foreign accounts last year. According to the European Central Bank, large companies in the eurozone alone left $90 billion in revenue.

Tens of billions of dollars for raw materials sold abroad do not reach Russia: now exporting companies sell only 22% of their revenue on the exchange – half as much as a year ago Viktor Tunev, former chief analyst of Ingosstrakh Investments.

This is partly due to barter trade, which the authorities describe as exports and imports “in rubles”. Its share is estimated at 39%, but this is not the only factor, Tunev is sure: “Where, in what currency and for what purposes tens of billions of dollars were accumulated abroad remains a mystery.”

He points out that oil revenues of around $2 billion a month are flowing in an unknown direction: the actual discounts on Russian oil are lower than those announced by the Ministry of Finance ($10 a barrel instead of $18-30), and selling prices are correspondingly higher. This difference is being settled in the accounts of shady middlemen and carriers who transport raw materials under threat of sanctions, notes Bloomberg.

Yevgeny Prigozhin’s Wagnerian revolt, which shook the elites and citizens with tanks marching on Moscow, sparked a new wave of capital flight. In June, foreign currency deposits in Russian banks fell by $10 billion, although after last fall’s mobilization panic, such an outflow did not exceed $1-5 billion, notes Tunev. The political crisis has definitely caused an additional outflow of funds to foreign banks, not only from individuals, but also from companies, said BCS economist Natalia Lavrova.


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