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Nevertheless, it is partly a reflection of the general deterioration in the business climate and the prevailing political uncertainty in the country – aspects which will be monitored for any possible change rating change.
Preliminary data between January and September, suggest that Russian direct investments abroad have exceeded the FDI inflow by about 17 billion dollars.
“The Russian current account surpluses – a plus for its rating – make it a net exporter of capital. This implies a net outflow of capital without accumulation of foreign reserves” said the Fitch agency which predicts a current account surplus of 82 billion dollars (4.5% of GDP) in 2011, before falling to about 2,3% in 2012 and 1,2% in 2013.
According to the Central Bank of Russia, foreign exchange reserves will remain high, at at least 513 billion dollars until December 2011, as opposed to 480 billion dollars at the end of 2010.
A number of emerging markets have seen capital outflows during the last few months, partly due to the growing aversion to global risk arising from the Eurozone’s sovereign debt. Nevertheless, historically, Russia’s outflow of capital, follows periods of stress. Increased political risk, following the disputed legislative elections this month of December could provoke a new hike in this outflow.
The reaction of the political elite and the world of Russian business to the challenge, launched at Vladimir Putin’s authority, will be carefully scrutinized. If their support becomes fragmented (a scenario which is not envisaged by Fitch), then the political risk and the flow of capital are expected to increase still further.
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