2012 Outflow $56.8Bln, Declares Central Bank

By Howard Amos

The St. Petersburg Times

Published: January 16, 2013 (Issue # 1742)

The Central Bank said net capital outflow in 2012 was $56.8 billion, a drop from 2011 but the fourth-highest annual figure since the fall of the U.S.S.R.

Experts link the flight of funds to Russia’s investment climate, the country’s current account surplus and fears of political instability. Net outflows were observed every year after 2007, and inflows are on record for two only years since 1994. Other emerging markets, including India and Brazil, recorded inflows in 2012.

During the last quarter of 2012, $9.4 billion left Russia, according to preliminary data published on the Central Bank’s website.

That was a slight uptick from the second and third quarters, which saw outflows of $6.4 billion and $7.6 billion respectively. Amid political uncertainty, the presidential election campaign and the economic crisis in Europe, $33.3 billion left the country in the first quarter.

The banking sector saw a $23.6 billion inflow of capital, which helped the headline outflow figure to fall year on year. One of 2012’s biggest deals, the $5.2 billion privatization of state lender Sberbank, was hailed at the time by officials as a boost for the effort to reduce capital outflow.

The net outflow in all sectors outside banking was $80.4 billion. Many experts predict that outflows will shrink in 2013.

According to the Central Bank, capital outflow in 2013 will reach up to $10 billion if oil prices average $97 a barrel. This will rise up to $35 billion if the oil price averages $73 a barrel.