Has the capital outflow in Russia cooled down?

Ukrainian events exert an immediate influence on macroeconomic situation in Russia.  In the first quarter of 2014 the tangible pressure was placed on rouble and stock market. The capital outflow fastened under the threat of sanctions on the part of Western governments. 

However, both internal and external investors start recovering their temper gradually and appraising the existing state of affairs less emotional. According to Maksim Oreshkin, director of Long-range Strategic Planning Department of the Ministry of Finance, the capital outflow in April was around USD 4,6 billion, that is much less than the indicator documented a month earlier. Market stabilization will lead to trend reversal and rate diminution of capital export. 

Earlier Elvira Nabiullina, the Head of the Bank of Russia, indicated the key sources and reasons for the capital outflow. Within the first quarter of 2014 this indicator reached the level of USD 63 billion, two-thirds of which are accounted for by internal conversion and purchase of currency in cash by citizens and companies. This was related to increased uncertainty, caused by high rouble rate volatility and sharpening of geopolitical environment. Nabiullina brought into focus the fact that the remained third of the capital outflow is comparable with similar indicator of the first quarter of 2013. 

On the whole, following the results of the current year, the Ministry of Economic Development and Trade predicts the capital outflow from Russia at the level of USD 90 billion. The similar estimate (USD 85 - 90 billion) is given by the Head of the Central Bank of Russia. As a comparison, in 2013 the capital outflow in Russia made USD 59,7 billion, in 2012 – USD 53,9 billion.

In this respect, the financial authorities feel quite optimistic about the future and if the situation will be stable, significant slowdown of cash outflow is expected in II, III and IV quarters.