MOSCOW - Russia risks growth of just 0.6 per cent this year with capital flight reaching $100 billion, the economy minister warned on Thursday, amid growing alarm over the cost of President Vladimir Putin's intervention in Crimea.
Economy Minister Alexei Ulyukayev confirmed that capital flight for the first quarter alone would be about $60 billion (44 billion euros).
His warning comes as investors unnerved by the uncertainty surrounding Moscow's takeover of Crimea take their money out of Russia.
"Even if we see this as a one-off and we then go onto more standard outflow levels then for the year it will be $100 billion," he told an economic conference in Moscow, quoted by the state RIA Novosti news agency.
"Under this scenario economic growth is going to shrink to 0.6 per cent," he said.
Ulyukayev however said he was still optimistic that sanctions ordered by the West against Russia for its seizure of the Russian-speaking peninsula from Ukraine would not hit the wider economy.
The United States and European Union sanctions imposed so far involve visa bans and asset freezes for top Russian officials - some close to Putin - but do not yet target the broader economy.
"I share the optimism and see signals that the sides will address this problem more rationally," he said.
The knock-on effects of the Crimea intervention could hit the Russian economy hard at a time it is already feeling weakness due to the government's failure to implement structural reforms.
Respected former finance minister Alexei Kudrin gave a more pessimistic assessment than Ulyukayev, adding that growth would be "around zero" and capital flight could reach $150 billion.
"This is what we are paying for having an independent foreign policy," the prudent-talking economist said, quoted by RIA Novosti. "Society, for now, is ready to agree with this price."
Economists have said that Putin has undertaken a major economic risk by taking Crimea but is prepared to gamble that the political benefits for him will outweigh the economic losses.
On Wednesday, the World Bank gave the most downbeat assessment yet of the effect of the Ukraine crisis on the Russian economy, saying it could contract by up to 1.8 per cent.