Russia ‘hemorrhaging’ millionaires, report says

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

Almost three times as many Russian millionaires are expected to leave the country this year as in 2019, the year before the pandemic, according to a report by Henley & Partners, a company that helps wealthy clients move abroad.

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With Western sanctions making life harder for its elite, Russia is expected to suffer a net loss of around 15,000 high net worth individuals (HNWIs) – defined as those with wealth greater than $1 million – in 2022, compared to 5,500 in 2019 .according to the message. That corresponds to about 15 percent of Russia’s millionaires, it said.

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

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

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“It can also be a sign of bad things to come, as HNWIs are often the first to go… If you look at a major historical collapse of a country, it’s usually preceded by a brain drain of wealthy people from 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” it. [a] trend” of millionaires leaving the country.

Migration rates among Russia’s rich and powerful fell sharply in 2020 and 2021 as Covid-19 restricted international travel and closed borders.

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

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The West has imposed round after round of punitive sanctions against Moscow, including banning some Russian banks from SWIFT, the global payments network, and to freeze about half of the country’s international reserves. Numerous Western companies, including luxury retailers, have ceased operations in the country.

This year’s exodus of millionaires is expected to be more than nine times what it will be in 2021, data from Henley & Partners shows.

“Long before the imposition of sanctions … there was a tsunami of capital leaving the country, largely prompted by President Vladimir Putin’s increasingly capricious style of government and his demands for loyalty to the middle-class and wealthy Russians,” said Misha Glenny, an author and journalist , wrote in an analysis for Henley & Partners.

This year, most emigrant Russians are expected to move to southern European countries, where many already have second homes. But the United Arab Emirates is fast becoming more attractive to the country’s wealthy, in part because of its zero tax rate.

The UAE is expected to overtake the United States and the United Kingdom as the top travel destination for millionaires on the go this year. Henley & Partners forecasts the country will welcome 4,000 HNWIs by the end of the year, compared to about 1,000 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 for being the safe haven in the Middle East and Africa”.

That According to a study by Capgemini, a technology consulting firm that uses the same $1 million threshold as Henley & Partners, the global population of HNWIs has grown nearly 8% over the past year.

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