Millionaires leave Russia en masse after the country invades Ukraine and the West imposes sanctions.
Nearly three times more Russian millionaires are expected to leave the country this year than in 2019, the year before the pandemic, according to a report by Henley & Partners, a company that helps wealthy customers move abroad.
As Western sanctions make life difficult for its elite, Russia is expected to suffer a net loss of some 15,000 high net worth individuals (HNWIs), defined as people with more than $ 1 million in assets. , in 2022, compared to 5,500 in 2019. according to the report. That equates to about 15 percent of Russia’s millionaire population, he said.
Andrew Amoils, head of research at New World Wealth analysis firm, who provided data to the report, said Russia was “bleeding millionaires”.
“Wealth migration figures are a very important indicator of the health of an economy,” he told CNN Business.
“It can also be a sign of bad things to come, as HNWIs are often the first people to leave … if you look at a major collapse of a country in history, it’s usually preceded by a migration of rich people out of this country. “
Kremlin spokesman Dmitry Peskov dismissed the report in a call with reporters on Tuesday, saying the Russian government had not “noticed”. [a] trend “of the millionaires leaving the country.
Migration rates between the rich and powerful in Russia fell sharply in 2020 and 2021 as Covid-19 closed international travel and closed borders.
But the trend of wealthy people leaving the country during the decade before the pandemic has picked up and is now accelerating after the Russian invasion of Ukraine in February. Russia’s economy is expected to shrink by 8.5% this year, according to the International Monetary Fund.
The West has imposed round after round of sanctions on Moscow, including the expulsion of some Russian banks from SWIFT, the global payment network, and the freezing of about half of the country’s international reserves. Dozens of Western companies, including luxury retailers, have stopped doing business in the country.
This year’s millionaire exodus is projected to be more than nine times higher than in 2021, according to data from Henley & Partners.
“Long before sanctions were imposed … there was a capital tsunami that left the country, largely caused by the increasingly capricious style of government of President Vladimir Putin and his demands for loyalty to the middle-class and rich Russians, ”Misha Glenny. author and journalist, he wrote in an analysis for Henley & Partners.
This year, most Russian migrants are expected to move to countries in southern Europe where many already have second homes. But the UAE is becoming increasingly attractive to the country’s rich, in part because of its zero tax rate.
The United Arab Emirates is expected to surpass the United States and the United Kingdom as the top destination for millionaires on the move this year. Henley & Partners predicts that the country will host 4,000 HNWIs by the end of the year, compared to about 1,000 each year before the pandemic.
Amoils said the elites were attracted to the UAE as an “international business center with a high-income economy” that has “a reputation for being the safest oasis in the Middle East and Africa region.”
HNWI’s global population grew nearly 8 percent last year, according to research by Capgemini, a technology consultancy that uses the same $ 1 million threshold as Henley & Partners.