Post-Crimea capital outflow huge threat to Russian growth – minister

By Andrei Skvarsky.

With a boost given by the international political aftermath of Moscow’s annexation of Crimea, capital outflow threatens to drastically slow Russia’s economic growth, with recession not unlikely, the economics minister has warned.

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An estimated $60bn has been taken out of Russia since the start of 2014, about as much as for the whole of last year, Alexei Ulyukayev argued at an annual forum hosted by Moscow Exchange.

This year’s total outflow is likely to reach $100bn, and this would mean Russia posting growth of just about 0.6% and an investment decrease of 1.3% for 2014, he said.

If capital outflow, which has generally been a feature of post-Soviet Russia, slows down to its pre-Crimean crisis pace, 1.8% growth would be recorded for the year, while an annual loss of $150bn would mean “negative growth”, Ulyukayev said.

The minister suggested import replacement, more extensive trade with Asian and Pacific countries and recourse to the National Wealth Fund – a security fund for the pension system – as investment stimulation measures.

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