Foreign Investors Retreat $36 billion from Russia

• Financial

Foreign investors have pulled approximately $36 billion out of Russia between March 2022 and March 2023, according to an analysis of data from the Russian Central Bank cited by the RIA news agency. This mass exodus of capital comes in the wake of Russia's controversial invasion of Ukraine, which has led to heightened geopolitical tensions and stringent sanctions against the Kremlin.

A Gradual Retreat

In response to the escalating situation, several leading Western companies have either scaled back or entirely exited their operations in Russia. Despite the significant outflow of foreign investment, the Russian Central Bank's most recent report on the stability of the financial system suggests that the majority of foreign businesses have not completely divested their Russian assets.

Instead, they have chosen to maintain a right of return, thus preserving their future prospects in the Russian market, according to information relayed by the TASS news agency. The Central Bank's report details that from March 2022 to March 2023, around 200 sale transactions were carried out, with only a fifth of these involving assets worth over $100 million.

It further notes that only five transactions approved since October 2022 resulted in payments to non-residents exceeding $400 million.

The Impact on Russia's Economy

According to the Russian Central Bank, these asset sales have had a limited impact on the Russian economy.

This assertion, the Russian news agency affirms, is based on a number of factors. "Firstly, the majority of such transactions implies as a rule keeping of required licenses to production and patents and trademark rights. Raw materials, materials, and components continue to be supplied to companies; technical and material assistance is being provided.

Furthermore, many foreign companies, when exiting from Russian assets, reserve the opportunity to return for them," the Central Bank commented, as quoted by TASS. While foreign investors' withdrawal is significant in volume, their strategic approach appears to reflect a cautious stance rather than a wholesale departure.

These companies seem to be hedging their bets, keeping the door open for a possible return, should the geopolitical landscape become more favourable.