Londres (CNN Business) — Millionaires are flocking out of Russia from the invasion of Ukraine and Western sanctions on the country.
Almost 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 predicted to suffer a net loss of about 15,000 high-net-worth individuals (HNWIs), defined as people with more than US $1 million in assets, in 2022, compared to 5,500 in 2019, according to the report. This equates to about 15% of Russia’s millionaire population, he said.
Andrew Amoils, head of research at analysis firm New World Wealth, which contributed data to the report, said Russia was suffering from “millionaires’ bleeding.”
“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 go… if you look at the collapse of any major country in history, it’s usually preceded by a migration of wealthy people out of that country,” he added.
Kremlin spokesman Dmitry Peskov dismissed the report in a call with reporters on Tuesday, saying the Russian government had not “noticed [una] trend” of millionaires leaving the country.
Migration rates among Russia’s rich and powerful fell sharply in 2020 and 2021 as the covid-19 pandemic shut down international travel and borders.
But the trend of the wealthy leaving the country that was seen in the decade before the pandemic has resumed, and is now accelerating since the Russian invasion of Ukraine in February. According to the International Monetary Fund, the Russian economy is expected to contract by 8.5% this year.
The West has imposed round after round of sanctions on Moscow, including expelling some Russian banks from SWIFT, the global payments network, and freezing about half of the country’s international reserves. Dozens of Western companies, including some luxury retailers, have stopped doing business in the country.
This year’s millionaire exodus 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, in large part caused by President Vladimir Putin’s increasingly capricious governing style and his demands for loyalty to middle-class Russians.” and wealthy,” Misha Glenny, an author and journalist, wrote in an analysis for Henley & Partners.
This year, most Russian emigrants are expected to move to southern European countries, where many already have second homes. But the United Arab Emirates is proving increasingly attractive to the country’s wealthy, in part, because of its zero tax rate.
The Emirates is expected to overtake the United States and the United Kingdom as the top destination for on-the-go millionaires this year. Henley & Partners predicts that the country will take in 4,000 HNWIs by the end of the year, up from 1,000 arriving in the country each year before the pandemic.
Amoils said elites were attracted to the UAE as an “international business hub with a high-income economy” that has “a reputation as the safe oasis in the Middle East and Africa region.”
The global population of HNWIs grew nearly 8% last year, according to a study by tech consultancy Capgemini, which uses the same $1 million threshold as Henley & Partners.