LONDON, March 13 Capital flight from Russia has
risen sharply since the start of this year to $45-$50 billion,
Goldman Sachs said on Thursday, predicting full-year outflows
could be as much as $130 billion, or double 2013 levels.
Goldman says its calculations show capital outflows have
jumped 60 percent from year-ago levels as the economy slows and
the threat of Western sanctions bites. It also slashed its
forecast for Russian economic growth this year to 1 percent.
Western powers are considering imposing sanctions on Moscow
in response to its military intervention in neighbouring
Ukraine, especially if the Crimea region votes this weekend in
a referendum to secede from Ukraine and join Russia.
"The Achilles heel of the Russian economy remains the flow
abroad of Russian capital following any shock. We would also
think that any sanctions or even the threat of sanctions will be
ultimately targeted at these flows," Goldman analysts Clemens
Grafe and Andrew Matheny said in a note.
"Most of these flows, in our view, are driven by Russian
capital outflows rather than lower foreign inflows."
Grafe and Matheny calculate that total net private capital
outflows amounted to $45-50 billion in the year to date, or more
than a 10th of Russia's economic output in the first 2014
quarter. The outflows also represent a big jump over the $28
billion that left the country in the first three months of 2013,
Their models indicate total capital outflows for the year of
If confirmed, the data indicates growing pressure on the
Russian economy which is already showing its slowest growth
since 2008. Official data shows capital flight was $62.7 billion
in 2013, with outflows totalling $420 billion since 2008.
Goldman based its capital flight calculations on estimates
of a $25 billion current account surplus in the first three
months of the year and around $30 billion in foreign exchange
interventions by the central bank.
"If we are right in our estimate of net private capital
flows, pressure on the central bank's FX reserves will continue
all year," the analysts said.
Goldman also is the latest investment bank to cut economic
growth forecasts, predicting the economy will grow 1 percent
this year. Citi this week also cut its 2013 growth estimates to
"Recent events including an even sharper than we had
forecasted depreciation in the rouble, an even more aggressive
reduction in public sector wage growth and, most importantly, a
sharp shock to confidence on the back of the heightened
political tensions ... require a significant change in our
forecasts," Goldman told clients.
They added however that given the fluidity of the Ukraine
situation and possible policy responses, the margin of errors in
all the forecasts remained large.