Capital outflow from Russia nears US$300bn over three years

Foreign direct investment in the Russian real sector has fallen by 57% – from US$497.7 billion to US$216 billion – since the beginning of Russia’s full-scale invasion of Ukraine. This is the lowest level since 2009.

Source: The Moscow Times, citing data from the Central Bank of Russia

Details: In the first year of the invasion, Russia lost US$138 billion in foreign investment. In 2023, the figure was another US$80 billion, and last year a further US$63 billion was lost. In total, Russia’s economy lost US$281 billion in foreign capital between 2022 and 2024.

In rouble terms, this amounts to RUB 24.7 trillion (about US$296 billion) – over half of Russia’s federal budget (RUB 41 trillion or US$492 billion) and nearly equivalent to the total annual profit of all Russian companies (RUB 30.4 trillion or US$365 billion).

The Russian government had placed its hopes on BRICS partners, but those expectations have not materialised. "This points to the growing isolation of the Russian economy," said Janis Kluge, a research fellow at the German Institute for International and Security Affairs.

Even China, despite its status as a "strategic partner", has banned its companies from investing in Russian oil and gas projects, including the Power of Siberia 2 gas pipeline, and has refused to build car manufacturing plants in Russia.

Before the war, over 70% of foreign investment came from "unfriendly" countries. These states had invested in key sectors such as extraction, industry, trade, finance and science. Now, these investments have come to a halt.

Background: 

• Clients of the Russian division of Citibank have begun receiving coupon payments that were previously frozen due to EU sanctions. 
• The volume of foreign investment in Russia continues to decline rapidly and, as of October 2024, had fallen to its lowest level in 15 years.

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