Further evidence is emerging that Russia risks recession amid the fallout from Moscow’s annexation of Crimea from Ukraine and the Western sanctions that provoked.
As investors pull money out of the economy, the latest surveys of businesses show shrinking output in manufacturing and services between January and March.
Markit’s composite purchasing managers’ index dropped to 47.8 in March. It was 50.2 in February. The 50 reading marks the difference between expansion and contraction.
Russia’s Economy Ministry estimates up to $70 billion (51 billion euros) has left the country during that time, more than left the country in all of last year.
The head of the International Monetary Fund, Christine Lagarde, told euronews: “There have been consequences to the Ukrainian situation, as you call it. There has been a significant outflow from Russia to other parts of the world. So investors actually recognise when it’s time to move.”
Capital flight – mostly Russians sending their own cash abroad to avoid uncertainty at home – is a big factor in the Russian central bank’s recent growth warning.
It says the economy could expand by as little as 0.6 percent this year rather than the earlier forecast of 2.5 percent.
Worries over sanctions and the weak rouble have foreign investors halting or cancelling projects.