Kathrine Frich
That is more than Russia’s GDP
When confidence in an economy drops, people instinctively look for ways to protect their wealth.
Businesses and citizens move their money to safer shores.
Over the last three decades, that quiet exit has turned into a devastating drain.
Moving the money
Over the past twenty-five years, a staggering amount of wealth has vanished from the Russian economy. The scale is massive. Capital flight has now exceeded the entire gross domestic product of the country.
According to United24 Media, the total amount of money moved abroad since 1994 likely sits above $1 trillion. The Moscow Times reported that this steady drain pulls away 4 to 5 percent of the national economy every year.
The Center for Macroeconomic Analysis and Short-Term Forecasting noted that the real economy lost an average of 3 percent annually over the past decade.
Leaving in waves
Money flees fastest during times of intense conflict. The highest peak hit in 2022, shortly after the full-scale invasion of Ukraine.
United24 Media reported that capital outflows jumped past 12 percent of GDP that year. Foreign companies quickly closed their operations, and local citizens scrambled to move their savings across the border.
Similar spikes happened before. The annexation of Crimea in 2014 triggered a flight equal to about 10 percent of GDP. That matched the financial panic seen during the global crash in 2008.
Hiding the numbers
The Russian Central Bank stopped releasing detailed reports on private sector money leaving the country shortly after the war began. Still, the available historical records tell a very clear story.
Between 2001 and 2021, nearly $781 billion escaped the country. United24 Media noted that total capital flight since 1994 had already reached $907 billion before the current conflict escalated.
Today, non-financial companies hold foreign assets worth more than 40 percent of the current Russian GDP. Researchers are looking at ways to tax those overseas holdings to force the cash back home.
Sticking to cash
Financial anxiety has also changed how ordinary people manage their day-to-day lives. Trust in traditional banking is slipping.
A recent survey showed that 37 percent of respondents prefer to keep their savings in physical cash. This marks the highest preference for paper money since late 2022.
Only 36 percent chose bank accounts as their top option. This shift follows a massive wave of withdrawals. Citizens pulled roughly 2.6 trillion rubles from their accounts over a span of five months.
Sources: United24 Media, The Moscow Times, Center for Macroeconomic Analysis and Short-Term Forecasting
