World Bank sees $50 bn cap outflow from Russia

MOSCOW: Some $50 billion in net capital is expected to flee Russia this year, the World Bank said in a report on Tuesday.

Government officials have insisted that Russia would post some capital inflow by the end of the year although more than $83 billion has left the country in the past three months as foreign investors were selling off Russian stocks and pulling out amid falling oil prices and the work financial crisis.

In another forecast the World Bank said it is expecting Russia's oil-dependent economy to grow 6 per cent this year and 3 per cent next year, down from earlier projected 6.8 per cent and 6.5 per cent.

``Russia's strong short-term macroeconomic fundamentals make it better prepared than many emerging economies to deal with the crisis,'' but ``its underlying structural weaknesses and high dependence on the price of a single commodity make its impact more pronounced than otherwise,'' the World Bank said in the report.

The World Bank also estimated that a $1 trillion loss in Russian stock market capitalization since May has swept $300 billion from the pockets of Russia's rich.

Russia's foreign currency and gold reserves currently stand at $475 billion. This cash cushion is big enough to support the ruble and it will not fall dramatically, the World Bank's lead economist for Russia, Zeljko Bogetic, said Tuesday, according to the ITAR-Tass news agency.

In an unexpected word of praise, the World Bank hailed Russia for a ``swift and massive policy response'' to shore up its financial system referring to the government's rescue package for banks and markets.

President Dmitry Medvedev said Tuesday the rescue package - which currently comes to $200 billion - may soon be extended. ``This is not the final figure,'' he said, according to Russian news agencies.