Capital Moving Out of Russia to Tune of $58 Billion

Oct. 3, 2012
The central bank has predicted net capital outflows to reach $65 billion this year after jumping above $80 billion in 2011.

Russia on Wednesday reported an unexpected jump in net capital outflows to $57.9 billion for the year to September despite efforts by President Vladimir Putin to rebuild investor trust.

The central bank said a net total of $13.6 billion in investments had left the country between July and September in addition to outflows of $9.7 billion recorded in the preceding three months.

But the news was not dire across the board: data showed a positive net of $10.8 billion being invested by foreigners in Russian stocks and banks actually attracting more cash then sending overseas themselves.

Russia's performance was hurt most severely by a sharp jump in actual foreign assets leaving the country -- from $22.3 billion between April and June to $29.5 in the last quarter.

The central bank has predicted net capital outflows to reach $65 billion this year after jumping above $80 billion in 2011.

The net figure -- fluctuating from quarter to quarter because of market factors and changes to dividend payment rules -- is closely watched overall as a sign of international trust in Putin's economic strategy.

Analysts had expected an uptick in investor confidence to follow Putin's return for a third term because of his tight control over policy and ability to centralize the decision-making process.

But both the markets and the ruble have since trod lower while the economy now faces the double burden of slowing growth and food-price fuelled inflation.

Economists further predict a poor end to the year that will see the ruble come under pressure from global prices on Russian energy -- its most important export -- slipping off their current levels on renewed European concerns.

Economists at VTB Capital predicted a "further slowdown... in October-December on the back of lower oil prices and unfavourable seasonality.

"The ruble is set to remain under pressure," the Moscow-based house added.

Copyright Agence France-Presse, 2012

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