Capital outflow from Russia in 2022 may exceed $200 billion

In 2022, a total of $200 billion will be withdrawn from Russia, follows from the report of BCS Global Markets (BCS GM), cited by Interfax. The main contribution to the outflow is made by households: personal transfers of Russians from the end of February to August amounted to $14 billion.

The report says there was a $3.5 billion jump in transfers from Russia abroad in February, but capital controls put the process on hold. However, after the partial lifting of restrictions, the Russians continued to withdraw funds abroad. In June, the volume of such transfers reached $5.2 billion.

The main direction of capital flows became neighboring countries: Georgia, Armenia and Kazakhstan. In June, the amount of transfers to these countries increased seven to eight times compared to 2021. The amount of money transferred by Russians to Uzbekistan has quadrupled compared to June 2021.

In the first half of 2022, the net outflow of funds from the private sector peaked at $130 billion, or 11% of GDP. In 2014, net capital outflow doubled and amounted to $150 billion. In 2014, net purchases of foreign currency exceeded $30 billion, while in the first quarter of 2022 alone it amounted to $20 billion.

Households could account for more than 60% of private capital outflows in the second quarter of 2022, BCS GM estimates. If the current easing continues in the second half of 2022, the outflow of funds may increase by another $90 billion and as a result exceed $200 billion. Against this background, the attractiveness of the yuan and the Hong Kong dollar will increase.

According to the Central Bank, in 2021 the outflow of capital from Russia increased to $72 billion from $50.4 billion in 2020, i.e. by 42%. In 2022, with an average oil price of $65 per barrel, the Bank of Russia predicted capital outflow of $65 billion.

Anastasia Larina