Russia’s capital outflows slow sharply

MOSCOW - Reuters

Capital outflows from Russia slowed sharply in the second quarter, data showed on Wednesday, reflecting a combination of technical and seasonal factors and a lessening of political tension, economists said. Large outflows in the first quarter of 2012 and the fourth quarter of last year also coincided with a fraught election period, marked by large opposition protests. The decline in outflows follows Vladimir Putin’s re-election to the Kremlin in March.

Central bank figures showed that net private-sector capital outflows fell to $9.5 billion in the April-June quarter, down from $33.9 billion in the first three months of this year. The central bank did not provide a monthly breakdown for the second quarter. Previously the central bank had estimated that capital outflows were $7.3 billion in April and $5.8 billion in May, implying a net inflow in June.

Russian businesses’ tendency to park many of their profits offshore is widely seen as a poor reflection on Russia’s own investment climate. Capital outflows reached $80.5 billion last year, up from $34.4 billion in 2010.