- Russia saw an record $239 billion in net capital outflows — i.e. assets leaving — in 2022, per a think tank.
- The outflow was four times that in 2021 and 70% more than during the GFC in 2008.
- Some of the capital likely left for neighboring countries, where some Russians have fled to.
It's not just Russians who are leaving their homeland, a large swathe of capital has also left the country following its invasion of Ukraine.
Russia witnessed an unprecedented $239 billion in net capital outflows in 2022 amid the war in Ukraine, according to a Monday report from the Center for Macroeconomic Analysis and Short-term Forecasting, a Moscow-based think tank. According to Investopedia, capital outflows refer to the movement of assets out of a country.
Outflows this significant are even larger than Greece's GDP of $219 billion in 2022, according to World Bank data.
Countering that, Russia's current account surplus — meaning a country's exports eclipse its imports — hit a record high of $227 billion in 2022 as revenues from the country's oil and gas exports surged while imports plunged on the back of sweeping sanctions over the Ukraine war.
Last year's capital outflows were four times that of 2021 and 70% more than in 2008 amid the Global Financial Crisis, according to the analysis. Another $27 billion has flowed out of Russia so far in the first half of 2023, the report states. Insider could not independently verify these numbers.
The outflows out of Russia are not all about money getting transferred out of the country. They would also cover overseas investments.
But it's not just Russia — emerging markets, in general, have become increasingly exposed to capital outflows last year as the US dollar strengthened against local currencies, Bloomberg reported in September 2022.
Part of the capital outflows likely left for neighboring countries, where some Russians have fled to, following the start of the Ukraine war.
Russians transferred about $1.75 billion to Armenia in 2022, Martin Galstyan, the country's central bank governor, said in January, Armenia's News.am reported. Money transfers from Russia to Georgia rose fivefold, from $411 million in 2021 to $2.1 billion in 2022, according to data from Georgia's central bank.
Many of these Russians landed in neighboring countries, setting up new lives and businesses, and ended up boosting the economies of these nations, the independent Russian media outlet Novaya Gazeta reported Friday.
Although Russia's economy appeared to be holding up in the first year of the Ukraine war, the situation has gone from bad to worse due to stifled exports, a weak ruble, and now, record-breaking capital outflows.
In fact, Russia's current account has collapsed by 93% since last year, Insider reported on July 13.
"It is a slow burn," said Timothy Ash, an associate fellow at Chatham House's Russia and Eurasia program, the UK media outlet Telegraph reported on Monday. "As time goes on, the more difficult it gets for them. They will have to make choices, guns versus butter."