You're reading: Sberbank CIB: Net capital outflow from Russia unlikely to top $80 billion in 2014

Moscow - Economists at Sberbank Investment Research, a division of Sberbank CIB, do not expect the net capital outflow from Russia to exceed $80 billion this year.

This forecast assumes that Russia’s current account surplus will probably
widen to $40 billion, primarily due to a moderate decrease in imports of goods
and services, the investment bank said in a report. In addition, if the
geopolitical situation stabilizes the Central Bank of Russia will lose no more
than $30 billion-$40 billion of its foreign currency reserves this year, the
economists reckon.

Furthermore, the Central Bank’s intervention on the forex market should not
be directly considered capital outflow, since almost half of this amount returns
to the Central Bank in the form of swaps, the economists note.

“After a number of dramatic events on the forex market at the beginning of
March, the situation has apparently stabilized. The dollar’s exchange rate fell
below 36 rubles/$1 at the end of the month, and at the beginning of April even
came close to 35 rubles/$1. It is premature to talk about a complete
stabilization of the forex market, since the CBR is continuing intervention.
Nonetheless, the current condition of the forex market makes it possible to
cautiously assume that, taking into account current prices for oil and
geopolitical risks, the ruble’s current exchange rate against the dollar is
close to balanced,” the report said.

Economic Development Minister Alexei Ulyukayev said in late March that with a
capital outflow of $100 billion in 2014, which according to him is a likely
scenario, Russian economic growth will slow to 0.6%. With capital outflow of $60
billion, economic growth will measure 1.8-1.9%, but if capital outflow exceeds
$150 billion, the economy could contract by 1.8%, the minister predicted.