Millionaires in Russia are leaving in droves


London
CNN Business

Millionaires are leaving Russia in droves after the country invaded Ukraine and imposed Western sanctions.

Almost 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 clients relocate abroad.

As Western sanctions make life difficult for the elite, Russia is expected to suffer a net loss of about 15,000 High Net Worth Individuals (HNWIs) – defined as people with assets of more than $1 million – in 2022, compared to 5,500 in 2019, according to the report. This equates to about 15% of the Russian population who are millionaires, she said.

Russia was “bleeding millionaires out,” said Andrew Amwells, head of research at analytics firm New World Wealth, which contributed data to the report.

“Wealth migration numbers are a very important measure of the health of the economy,” he told CNN Business.

“It can also be a sign that bad things are going on because the wealthy are often the first to leave… If one looks at any large country falling apart in history, it usually precedes the migration of the wealthy away from that country,” he added.

Kremlin spokesman Dmitry Peskov He dismissed the report in a telephone call with reporters on Tuesday, saying the Russian government “did not notice [a] The trend of “millionaires leaving the country.

Immigration rates among Russia’s rich and powerful fell sharply in 2020 and 2021 with Covid-19 shutting down international travel and closing borders.

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But the trend of wealthy people leaving the country seen in the decade before the pandemic has resumed, and is now accelerating after Russia’s invasion of Ukraine in February. The Russian economy is expected to shrink by about 8.5% this year, according to the International Monetary Fund.

The West has imposed round after round punish penalties On Moscow, including the expulsion of some Russian banks from Swiftglobal payments network And the freezing of about half of the country’s international reserves. Dozens of Western companies, including luxury retailers, have Stop doing business in the country.

The exodus of skilled workers caused a “brain drain” in Russia

Henley & Partners data shows that the outflow of millionaires this year is expected to be more than nine times what it was in 2021.

“Long before the sanctions were imposed… there was a tsunami of capital leaving the country, driven in large part by President Vladimir Putin’s fickle style of governance and his demands for loyalty to the Russian middle class and wealthy,” Misha Glenny, author and journalist, in an analysis for Henley & Partners.

This year, most Russian immigrants are expected to move to countries in southern Europe where many already own second homes. But the UAE is quickly becoming increasingly attractive to the country’s wealthy, in part due to its zero tax rate.

The UAE is expected to overtake the US and UK as the number one destination This year’s mobile millionaires. Henley & Partners predicts the country will welcome 4,000 ultra-rich people by the end of the year, compared to about 1,000 each year before the pandemic.

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Amwells said the elite were drawn to the UAE as an “international business hub with a high-income economy” that had a “reputable reputation for being a safe oasis in the Middle East and Africa.”

The The global population of the wealthy grew by about 8% last year, according to research by technology consultancy Capgemini, which uses the same million-dollar threshold as Henley & Partners.

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