Support The Moscow Times!

Foreign Direct Investment Into Russia Is Falling

Russia is at the bottom of the Institute of International Finance’s list of emerging markets.

Investors blame unpredictability for the decline. Jürg Vollmer / Flickr (CC BY-SA 2.0)

Foreign direct investment (FDI) into Russia accounted for only 0.2 percent of gross domestic product (GDP) from 2015-2018, putting it at the bottom of the list of emerging markets, the RBC news website reported, citing the Institute of International Finance (IIF).

The IIF figures exclude reinvested earnings to focus on “real” GDP.

Reinvestment is not the flow of capital, and in some cases may reflect restrictions on the repatriation of profits from the country of investment to the country of the investor, RBC cited the IIF report as saying.

The figure of 0.2 percent puts Russia below Nigeria with 0.3 percent, Venezuela with 0.5 percent and Ukraine with 2.7 percent. Taking reinvestment into account would have raised the FDI calculation to 1.5 percent of GDP — higher than Saudi Arabia, Nigeria, South Korea, South Africa and Venezuela.

“For Russia, the key issue is sanctions, although other factors are also investor perception that the investment climate is poor and low growth potential,” RBC cited IIF deputy chief economist Elina Rybakova as saying.

For most of the 2000s, FDI inflows came from investors looking to gain access to the large and growing Russian consumer market. But falling energy prices and the Kremlin’s adoption of more cautious macroeconomic policies slowed consumption-driven growth, Rybakova added.

Speakers at an Association of European Business (AEB) conference in Moscow this week said unpredictability, administrative barriers and political processes were the main reasons for the decline in foreign investment in Russia.

Sign up for our free weekly newsletter

Our weekly newsletter contains a hand-picked selection of news, features, analysis and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview
Subscribers agree to the Privacy Policy

A Message from The Moscow Times:

Dear readers,

We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."

These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.

We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.

By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.

Once
Monthly
Annual
Continue
paiment methods
Not ready to support today?
Remind me later.

Read more