Streetwise Professor

May 31, 2011

We’re Outta Here

Filed under: Economics,Politics,Russia — The Professor @ 10:44 am

Apropos my post about Russian capital flight, in the first four months of 2011, capital leaving the country has totaled $30 billion:

The net outflow of private capital, which started to pick up pace last year, amounted to about $30 billion in the first four months of 2011. “That is a very large figure,” Sergei Ignatyev, chairman of the Central Bank of Russia, told a banking conference Thursday.

And that may represent only about half the actual flight, with the rest coming in informal and illegal transfers.

Large, indeed.  That’s about the total flight in 2010.  I say again: in the first 4 months of 2011, capital flight has equaled or topped its 2010 total.

It is especially large given that fundamentals–the price of oil, particularly–should favor hot money inflows.  And given that other emerging markets and commodity economies have seen inflows.  I imagine that a rigorous econometric adjustment for these factors would mean that the outflows are pretty much off the charts.

Not exactly the kind of development that will lead to a doubling of GDP, per capita or otherwise.  A testament to the corrosive impact of Putinism, and the prospect for 12 more years of it.

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  1. I think that the two names greatly contribute to this flight as they should: Khodorkovsky and Magnitsky. Not even the two courageous people themselves but what happened to their business or the business they worked for. Absolute disregard for the law and protection for bandits.

    Comment by voroBey — May 31, 2011 @ 2:52 pm

  2. ‘capital flight’ or ‘capital export’ as one can interpret it as well is not that straight forward as many put it, one could come up with a different spin like ‘Russian capital expands abroad’, or ask does Russia really needs more capital with Ruble already so high and inflation running close to double digits? on a different note, from what I know Germany is the country with the highest capital flight, so is Germany broken as well?

    Comment by noone — May 31, 2011 @ 4:45 pm

  3. Considering that all the money is stashed in offshores, has there ever really been any capital in Russian to begin with?

    Comment by So? — May 31, 2011 @ 9:38 pm

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