Capital outflow from Russia: Dynamics of cross-border transfers from 2006 to 2017

Sources of information on capital withdrawal

One of the most important sources of data regarding capital outflow from the Russian Federation is the Central Bank, which systematically provides official information on transactions between countries conducted by individuals. According to the published information, from 2006 to 2017, the total volume of transfers from Russia to 257 countries and regions amounted to an impressive 479 billion dollars at current prices, which, when adjusted to the 2017 level, is equivalent to 519 billion dollars. This amount represents about 2.4% of the country's gross domestic product for the specified years.

Analysis of cross-border transfers

The study on cross-border translations shows a general trend of a continuous increase in translation volumes during the observed period. The average annual increase was approximately 1.8 billion US dollars, which corresponds to 4.1% of the average annual figure for all years of observation.

The highest volume of remittances was recorded in 2014, when it reached 69 billion dollars at current prices, which is equivalent to 72 billion dollars in 2017. This figure was 1.7 times higher than the average recorded over the entire period.

Dynamics of investments

However, the dynamics of capital outflow from Russia were not uniform. Three periods of significant growth can be identified, interrupted by two substantial declines associated with the financial crises of 2008 and 2014.

The 2014 crisis had a deeper impact on both the economic situation in the country and the cross-border transfer sector than the 2008 crisis. When comparing the declines in transfer volumes during the years of the crises, the drop in 2014 was nearly twice as much as in 2008.

Trends of growth after crises

During periods without crises, capital outflows gradually increased, although the growth rate noticeably slowed down after each crisis. In 2017, the total amount of transactions was $43.8 billion, slightly above the average level for the period starting from 2006 ($43.2 billion), but 1.6 times lower than the record set in 2014.

After the financial crises of 2008 and 2014, the volumes of cross-border transfers began to grow again, but the pace of this growth was significantly lower than what was observed before the crises.

The relationship between remittances and GDP

It is also worth noting that the share of cross-border transfers in relation to Russia's gross domestic product shows a similar, albeit less pronounced, trend. The average annual growth rate for the period from 2006 to 2017 was 3.8% of the average annual values.

The correlation coefficient characterizing the relationship between the volume of capital outflow and GDP is 0.84, which confirms the presence of a statistically significant dependence at the 99% level. Experts in this field note that the increasing level of capital outflow from the country has become one of the key reasons for the financial crisis of 2014.

Increase in the volume of money transfers from Russia

With the increase in the volume of money transfers from Russia in absolute terms, there is also a noticeable growth in their contribution to the country's gross domestic product (GDP) in percentage terms. According to the statistics from the Central Bank, capital outflows from the Russian Federation to other countries reached 318 billion dollars at current prices from 2006 to 2017, which is equivalent to 344 billion dollars in 2017. This accounts for almost two-thirds of all monetary transactions carried out outside of Russia.

Analysis of changes in transfer volumes

When we analyze the changes in the volume of transfers to foreign countries over the specified period, it becomes clear that there are no significant deviations from the overall level across all regions. It is important to note that the correlation coefficient between these data is 0.98, which demonstrates an extremely high degree of consistency.

It is noteworthy that over 50% of all transactions from Russia are directed to six leading countries:

• Switzerland
• China
• U.S.
• United Kingdom
• Germany
• Latvia

Countries with significant translations

Judging by the remittances to larger countries, for each of which the share is at least one-thousandth of the total volume, there are 65 such states. In this regard, it can be noted that in several cases, the average annual growth rates of remittances exceed the overall growth rate, which is 4.1%. At the same time, there are countries where negative dynamics are observed, and the volumes of remittances are significantly decreasing.

Fluctuations in transaction volumes

Regarding fluctuations in transaction volumes, the average annual range, which is the average value of absolute changes between indicators of neighboring years, allows for an assessment of the stability and uniformity of remittance dynamics in various countries, regardless of whether they are changing positively or negatively. On average, across all countries over the specified 12-year period, this parameter is 30.3%, but in individual countries, the situation can vary significantly.

Minimal changes in the dynamics of transfers

In addition, five countries can be identified with minimal changes in the dynamics of transfer volumes. The stability of these changes can be assessed by the number of times the direction of transfer volume changes fluctuated during the analyzed period — both from a negative trend to a positive one and vice versa.

From 2006 to 2017, there were four trend shifts observed in the space, triggered by crisis situations:

• In 2009, there was a shift from growth to decline.
• Then in 2010, growth resumed.
• Similar changes occurred between 2014 and 2015.

Thus, the conducted analysis allows us to see a complex and multilayered picture of money transfers from Russia, where geographical and dynamic aspects significantly influence the economic situation in the country.

Interesting transaction dynamics

Between 2006 and 2017, interesting changes in financial transactions between Russia and various other countries can be observed. Three countries—Hungary, China, and Malta—changed the direction of their transfers a total of seven times, indicating a high level of instability in their financial flows. Additionally, another group of eleven countries, including Greece, Egypt, Ireland, Lithuania, Liechtenstein, Luxembourg, Monaco, the Netherlands, the United Arab Emirates, Croatia, and Switzerland, changed the direction of their transfers six times. This highlights that frequent changes in transfer directions are more commonly seen in countries that are not among the top twenty in terms of transfer volume.

Stability of large countries

It is worth noting that countries receiving the largest volumes of remittances show stability in line with overall trends. The most significant fluctuations are usually observed in countries that are not in the top 20 for remittance volumes. An exception is Switzerland, which is at the top of the list, demonstrating both rapid growth and significant changes in remittance amounts over the years. China, which ranks second, on the other hand, shows a trend of slow and even negative development.

Dynamics of transfers to different countries

The dynamics of remittances from Russia to leading countries in terms of the volume of transfers during the specified period is similar to the average data across all countries. Characteristic features of the dynamics most often manifest in countries that are not in the top ten by transaction volume. In each of the analyzed time periods between crises, it is possible to identify categories of countries occupying different positions in terms of remittance volumes, among which only five countries — Switzerland, China, the USA, the UK, and Germany — remained among the leaders throughout all 12 years.

Increase and decrease in the volume of transfers

Each individual period of messages indicates the countries where the growth in transfer volumes significantly exceeded the global averages, as well as those whose figures, on the contrary, showed a decrease against the backdrop of overall growth. If we consider the countries that accounted for at least 0.1% of the total transfer volume, we can highlight Luxembourg, which demonstrated steady growth over all three inter-crisis periods, although its rates began to align with global figures over time.

Trends after crises

It is often the case that countries with a sharp increase in remittance volumes before the crises of 2008 and 2014, starting from 2015, face a trend of decline. This affects not only offshore zones, such as Saint Kitts and Nevis or Jersey, but also large countries located on different continents, such as Bulgaria, Finland, and Thailand.

The specifics of countries in translations

Among the ten countries involved in the exchange of remittance volumes over a 12-year period, Germany and Latvia stand out. These countries demonstrated a decline in remittance volumes between 2015 and 2017, sharply contrasting with the preceding growth. Most countries that previously experienced significant growth in remittances from Russia before the economic crises of 2008 and 2014 faced negative dynamics during the period from 2015 to 2017, which again highlights the challenges that various nations encounter in the changing context of international finance.

Introduction

A comparative analysis of cross-border money transfers during the crisis years of 2008 and 2014 reveals a number of notable patterns. It is important to pay attention to those countries where the volume of financial transfers from Russia underwent significant changes between 2008 and 2009, exceeding trends in other countries.

Growth of remittances in various countries

For example, as a result of the financial crisis of 2008, several countries hardly experienced a decline in remittance volumes, while in some cases there was even an increase. Among these countries, the highest growth in remittances was shown byHong Kong...where around was sent in 20097 billion dollarsthat on400 millionexceeds the level of 2008 (taking into account inflation up to 2017).

Economic development before the crisis

For a long time, up until the onset of the economic crisis in 2008, countries like China and Turkey demonstrated steady growth in their economies. However, in the following years, between 2009 and 2014, there was a consistent decline in their economic indicators. But starting in 2015, both countries began to regain their growth rates.

Analysis of money transfers

One of the key points is the analysis of money transfers from Russia to various countries from 2006 to 2017, where interesting changes and fluctuations can be observed. Switzerland demonstrated the largest increase in transfers over the entire period under review. In particular, in 2014, there was a significant jump that recorded an increase in transfers by $6.4 billion, which, in 2017 prices, represents a 142% increase. However, in the following year, 2015, this growth was almost completely offset by crisis phenomena, leading to a decline in transfer volumes by $6.8 billion.

The situation in Austria and Switzerland

A similar situation was observed in Austria, where in 2013 the volume of remittances reached 2.5 billion dollars, which is 2.8 times more compared to the previous year, 2012.

Throughout the specified period, the total volume of remittances to Switzerland amounted to $50.5 billion at 2017 prices, which is more than 50% higher than the corresponding figures for second-ranked China. Thus, the share of remittances from Russia to Switzerland constitutes an impressive 9.7% of the total global remittance volume, confirming Switzerland's leadership in this area.

The situation of China after the crisis

As of 2006, China confidently held the title of the leader among countries in terms of remittance volumes, surpassing Switzerland by 2.6 times. However, after the 2008 crisis, China began to face economic difficulties, which by 2017 led to its drop to 20th place on this list. The volume of remittances to China in 2017 was 3.3 times less than that to Switzerland.

From 2015 to 2017, there was a slight increase in remittances to China, averaging 12% per year, but it is too early to speak of a stable upward trend in this case. A similar situation is observed in Turkey, where the volume of remittances to it was 2.6 times lower than that to China.

The situation in Latvia

Latvia showed positive growth rates in remittances for a long time until the crisis in 2014 and was only slightly affected by the economic difficulties that arose during the two crises. An important point is the significant increase in remittances from 2012 to 2014, when the growth averaged 60% per year. However, after 2014, Latvia began to demonstrate a steady trend of decreasing remittance volumes from Russia.

Trends in Cyprus and Monaco

The volumes of funds sent from Russia to Latvia remained stable until the 2014 crisis, but after that, there was a noticeable decline. Cyprus and Monaco, in turn, show similar growth rates in transfers.

• From 2006 to 2017, both countries showed a steady increase in the volume of money transfers.
• Financial crises have had a minimal impact on their dynamics.
• In 2012, both Cyprus and Monaco experienced a similar decline in remittances, reaching 62% of the average annual values for the entire study period.

Interest in cross-border transfers

In recent years, there has been a growing interest in transactions related to international money transfers, especially in the context of real estate deals. Since 2009, the Central Bank of Russia has been collecting and publishing statistics regarding such transfers. It is important to emphasize that this data only covers transfers made by individuals who are residents of the Russian Federation.

Analysis of translation dynamics

Analyzing the changes in the volumes of remittances by residents across various directions over the past 12 years, it can be observed that the statistics do not show any significant differences compared to the overall volumes of remittances from all individuals.InterestingThe correlation coefficient between the two data sets is 0.99, indicating a high degree of correlation. This confirms that the differences between residents and non-residents do not affect the transfer statistics.

Volumes of transfers for real estate transactions

The period from 2009 to 2017 showed that the total volume of remittances by residents for real estate purchases amounted to 13.4 billion dollars at 2017 prices. The average annual volume of remittances of 1.5 billion dollars reflects:

• 4.8% of the total number of transfers by residents in all directions;
• 3.2% of the total volume of transfers made by all people sending money out of the country.

However, the Central Bank does not provide detailed data by country, which limits the analysis to global indicators only.

Dynamics of cross-border transfers

The dynamics of cross-border transfers show significant fluctuations. Since 2009, the volume of transfers has increased, reaching 1.03 billion dollars, and in 2011 it continued to grow with exponential dynamics. As of 2013, the transfer volume peaked at 2.27 billion dollars. The average annual growth rate was 20%, which is 2% higher than the overall growth rate of all transactions.

Period of declining transfer volumes

However, since 2013, there has been a decline that reached a minimum level of $0.89 billion by 2016. During this period, annual remittances fell by 61% from the peak level, which is a more significant drop compared to the overall losses in remittances from Russia during the economic crisis, which amounted to 49%. Only in 2017 was there an increase to $1.1 billion, which is just 6% higher than the level in 2009. The volume of remittances in that year increased by 23%, which is also a leading indicator compared to the overall growth from 2016, which was 19%.

Reduction in the share of transfers for real estate transactions

However, it is worth noting that the share of real estate transactions in the total volume of remittances has been gradually decreasing throughout the analyzed period from 2009 to 2017, showing an annual decrease of 0.3 percentage points. This indicates that, despite changes in the volume of real estate transactions, their relative share in the context of all international transactions is gradually shrinking.

Conclusion

The conclusion of this article summarizes the multifaceted topic of cross-border transfers from Russia, which over the course of 12 years (2006-2017) has demonstrated complex and contradictory trends. By comparing data from the Central Bank of Russia on transfer volumes, we can observe not only an overall increase but also periodic sharp declines caused by the economic crises of 2008 and 2014.This unevenness in the dynamics of capital outflow highlights the influence of the external economic situation.on financial flows and the economy of the country as a whole.

It's interesting that despite the negative consequences of crises, after each one, the volume of transactions returned to growth, although the recovery rates were significantly lower than before the crisis.This may indicate a slowdown in trust in the economy and the stability of the country's financial sector.All these observations help to better understand the overall state of the economy and its dependence on transactional flows.

Key aspects of capital outflow from Russia:

• Overall growth in the volume of transfers from 2006 to 2017.
• Periodic downturns as a result of economic crises.
• A slowdown in growth rates after each crisis.
• The impact of the external economic situation on the domestic market.

Thus, cross-border transfers not only reflect the level of economic activity but also serve as an indicator of citizens' trust in the domestic economy.This creates a need for the development of strategies....contributing to the stability and resilience of internal economic processes, which is especially important in the context of an unpredictable international economic climate.

I hope that this research will provide readers with useful guidelines for further analysis of the capital situation in Russia and beyond.Understanding this dynamic can help in developing more effective financial policies.both at the state level and at the level of individual investors.