Capital flight is in the news, usually in the context of investors exiting countries suffering from political instability, as in the Middle East and North Africa, or economic malaise, as in the euro area’s troubled periphery. But robust capital outflows are also making headlines in Russia, with the latest statistics from the central bank showing a US$21.3bn outflow in the first quarter.

A number of factors are cited when explaining the outflow, which was 45% larger than the outflow recorded in the first quarter last year. There are technical and seasonal factors, some say. Others take a dimmer view, noting a general unease among investors regarding the country’s business environment and political uncertainty during the run-up to the presidential election in March next year. Another important factor now being discussed, with some encouraging implications, is the development of rouble-denominated capital markets. Falling interest rates and a growing appetite for local-currency financing has led more Russian companies to borrow in roubles in order to repay foreign debts.   

Russia’s economic recovery—now further bolstered by high oil prices—has not been accompanied by an influx of foreign capital. At the same time, this disappointing performance is balanced by the prospect of deeper local capital markets.