The Foundering Putin Economy
Last week saw another epic tidal wave of bad economic news sweep over the helpless shores of Vladimir Putin’s Russia.
It was announced that Russia had lost a whopping $30 billion in capital flight last year, a stunning four times more than the Kremlin had predicted would occur. The bloodletting continued in shocking fashion this year, when capital outflow in January alone reached $13 billion despite a rising oil prices that should have redirected foreign money towards Russian assets. At this rate, capital flight in 2011 will be even higher than it was last year.
Then the world learned that Russia has the lowest foreign investment rate of any emerging economy on the planet. Major retailers like Wal-mart and Carrefour have rejected the Russian market entirely, while others like Ikea have ceased further investment. Foreign banks too, it was reported, are fleeing the Russian market, lest their capital be stolen by the so-called “government” they find there.