Nearly three times as many 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 firm that helps wealthy clients move abroad.
As Western sanctions make life harder for its elite, Russia is expected to suffer a net loss of around 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% of Russia’s millionaire population, he said.
Andrew Amoils, head of research at analytics firm New World Wealth, which provided data to the report, said Russia is “hemorrhaging the millionaires”.
“Wealth migration numbers 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 to leave… if you look at the collapse of a major country in history, it is normally preceded by migration wealthy people away from this country,” he added.
Dmitry Peskov, Kremlin spokesman dismissed the report during a call with reporters on Tuesday, saying the Russian government had “not noticed [a] trend” of millionaires leaving the country.
Migration rates among Russia’s rich and powerful fell sharply in 2020 and 2021 as Covid-19 halted international travel and closed borders.
But the trend of wealthy people leaving the country seen in the decade before the pandemic resumed and is now accelerating after Russia invaded Ukraine in February. The Russian economy is expected to contract by around 8.5% this year, according to the International Monetary Fund.
This year’s outflow of millionaires is expected to be more than nine times that of 2021, according to data from Henley & Partners.
“Long before the imposition of sanctions…there was a tsunami of capital leaving the country, largely driven by President Vladimir Putin’s increasingly capricious style of government and his demands for loyalty to class Russians. middle and rich,” Misha Glenny, an author and journalist, wrote in an analysis for Henley & Partners.
This year, most Russian emigrants are expected to settle in southern European countries where many already have second homes. But the United Arab Emirates is rapidly becoming more attractive to the country’s wealthy, in part because of its zero tax rate.
The United Arab Emirates is expected to overtake the United States and the United Kingdom as the first destination for millionaires on the go this year. Henley & Partners predicts the country will host 4,000 HNWIs by the end of the year, up from around 1,000 each year before the pandemic.
Amoils said the elites were drawn to the UAE as an “international trading hub with a high-income economy” which has a “reputation of being the safe haven in the Middle East and Eastern region. Africa”.
The the global population of HNWIs grew nearly 8% last year, according to research by Capgemini, a technology consultancy, which uses the same $1 million threshold as Henley & Partners.