Page 47 - Russia OUTLOOK 2024

• 2.5 FDI
Russia was successful at attracting FDI. Accumulated foreign direct investment was about 28% of GDP at the end of 2021 according to the OECD. However, this is the total accumulation of the flows of investment into Russia over thirty years and is small for a country the size of Russia. The OECD average is 62.9%, and the G20 average is 38%. China is 22% and India is 16%. So Russia is above average for its peers, but it is important to remember that a large part of this is offshore money being reinvested in Russia. Another factor that may inflate Russia’s number is that much of the investment in Russia is in capital-intensive natural resource projects, which have a higher capex per worker.
With 141 FDI projects in 2020, Russia ranked eleventh among Europe’s top 20 investment destinations. FDI projects in Russia dropped by 26% compared to the previous year (191), reflecting the wider trend across Europe: the average decline in European countries with negative FDI growth was 21%.
The number of FDI projects attracted by Russia in 2020 was close to that in 2014, with international investors undertaking fewer projects than they would have taken on in better market conditions. The COVID-19 pandemic, coupled with fears of imminent sanctions, had the highest impact on their decisions.
2020’s decline came off a previous historically high base. That high investment base would likely have been sustained; however, the COVID pandemic, amplified by the economic downturn, dealt a significant blow to foreign investment into Russia, comparable only to the shock caused by sanctions in 2014.
The value of FDI inward stock in Russia fluctuated during this period from approximately $471.5bn in 2013 to $449bn in 2020, with the decline due to sanctions placed on the country in 2014 after the annexation of Crimea.
Russia’s mining sector is by far the leading destination for foreign investors to Russia, with more than $116bn of accumulated FDI, according to CBR figures.
Manufacturing remained the most attractive activity for foreign investors in Russia. The number of manufacturing projects was unchanged from 2019 at 107, undertaken predominantly by investors from Germany, China, Italy and the US. All others combined represented only 32 total projects.
Moscow and the Moscow Oblast Region remained the top destinations for FDI in Russia (41 projects). The largest number of projects was
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