New statistics from the Central Bank of Russia indicate that almost $51 billion in capital exited the country in the first quarter of 2014.
Russia’s economic development ministry has downgraded the country’s forecast to less than 1% growth this year; an earlier estimate had been 2.5%. The World Bank projects that the Russian economy could shrink nearly 2% in 2014. That would cost Russia in the neighborhood of $30 billion in lost economic output.
Russia’s annexation of Crimea is turning into a costly boondoggle. The Kremlin has already earmarked nearly $7 billion in economic aid for the peninsula this year, funds that will be spent on everything from infrastructure to beefed-up pensions for local residents. Even when balanced against anticipated gains from Crimea’s energy resources and savings on naval basing arrangements, among other factors, that’s a cost Russia’s sluggish economy can ill afford.
Former Finance Minister Alexei Kudrin, for example, has projected that Moscow’s maneuvers in Ukraine could result in up to $160 billion in capital flight this year, and he concluded that the Russian economy will stagnate as a result.