World Bank: Russia capital flight to reverse after polls

PanARMENIAN.Net - Capital flight from Russia, which last year was second only in post-Soviet times to outflows in the crisis year of 2008, should reverse once political stability returns after the March presidential election, the World Bank says.

Nearly half of $84.2 billion in capital outflows last year occurred in the fourth quarter before and after the December 4 parliamentary election which was won by Prime Minister Vladimir Putin's United Russia party but sparked mass demonstrations against alleged vote-rigging and calls for a re-run.

"In a period of perceived instability and an election period, it often happens that capital outflows intensify," Michal Rutkowski, the World Bank's newly appointed country director for Russia, said, according to Reuters. "Once the elections are over, I think this trend will be over."

Relatively high yields on Russian assets and a commodity-exporting economy that is growing by around 4 percent a year make Russia attractive to investors but political tension has created risk. Political tensions deepened in September after Prime Minister Vladimir Putin and President Dmitry Medvedev announced a job swap that could potentially keep Putin in power for another 12 years.