FDI in Russia inflow to Russia down 92%

 

Nodira Sadikova

The total volume of FDI worldwide increased in 2015 by 36% compared with the previous year and reached $1.7 trillion. In countries with economies in transition, the flow of foreign direct investment decreased by 54%. The largest decrease in foreign direct investment in this group was observed in Russia. According to ‘Interfax’ excerpts from the World Investment Report prepared by the United Nations Conference on Trade and Development (UNCTAD), FDI flows into Russia have been declining rapidly since 201. In 2015, FDI influx fell by 92% compared to 2014. The Russian Ministry of Economic Development is forecasting worsening investment indicators in 2015-2016 with a slow positive increase by 2017. Earlier, the Ministry forecasted a decline in investment in fixed assets of 10,6% in 2015 and increase to 3,1% in 2016, 2,3% in 2017, 3,2% in 2018.

According to a previous official prognosis of the Russian Ministry of Economic Development, capital outflow in 2016 will account for $70bln, and $60 – 65bln. in 2017-2018. The updated macro prognosis will be released in September of this current year. However the Central Bank of Russian Federation presented different figures which indicate that capital outflow could reach $89bln in 2016, and $78bln in 2017.

Based on this year’s IPA survey, developed economies remain important sources of FDI, but they are now accompanied by major developing countries such as the BRICs, the United Arab Emirates, the Republic of Korea and Turkey. Indeed, China is constantly ranked as the most promising source of FDI together with the United States (figure 3). Among the developed economies, the United States, Japan, United Kingdom, Germany, and France are ranked as the most promising developed economy investors, underscoring their continuing role in global FDI flows. The Russian Federation took almost the last position as the least promising investor home economies for FDI. Yuri Trutnev, Deputy Prime Minister, expressed hope for greater understanding from the West. “It is the responsibility of the government to enact reforms quickly to diversify the Russian economy and to replace the diminishing income from oil prices,” Trutnev said.