The Minister for Economic Development, Andrey Belousov, mentioned that capital outflows in May moderated to below USD 6bn, from the monthly average of USD 13bn in 1Q12 and USD 7bn in April. However, he stressed that the investment climate needed to develop, as even though capital outflows were decelerating, they were still significant.
MinEconomy’s May estimate coincides with the CBR’s preliminary figure of USD 5.8bn. Both estimates suggest that capital outflows have been moderating – this is not surprising as they are typically highly correlated with current account dynamics. However, capital outflows persist, putting negative pressure on RUB, as is the worsening current account balance. Given global instability and international investors’ contained risk appetite, combined with further weakness in oil prices, we have concerns about the rouble’s strength in 3Q12.