Page 64 - RusRPTFeb19

5.3 FDI
Russia -FDI 2012 2013 2014 2015 2016 2017 Mar-2018
Foreign direct investment (BoP) (USD mn)
50,588 69,219 22,031 6,854 32,539 27,886 7,044
Foreign direct investment: % of GDP (BoP)
2.29 3.11 1.05 2.09 2.28 1.85 1.80
Foreign portfolio investment (USD mn)
19,312 748 -23,203 -12,872 3,020 9,330 3,728
source: CEIC
Foreign Direct Investment (Net Flows) in Russia increased by $4,300mn in the first quarter of 2018. Foreign Direct Investment in Russia averaged $5,985mn from 1994 until 2018, reaching an all time high of $40,140mn in the first quarter of 2013 and a record low of -$3922mn in the fourth quarter of 2005.
German FDI into Russia was up to €2bn in 3Q18 but the number of businesses operating was down by over 1000 in the last year. In the first three quarters of this year, direct investments of German business in Russia exceeded 2 billion euros, said Matthias Shepp, chairman of the board of the Russian-German Chamber of Commerce.
"German business extremely rarely so actively invested in such volumes in Russia since the collapse of the USSR. According to Bundesbank statistics, net direct investments of German companies in 2017 amounted to more than 1.6 billion euros, and in the first three quarters of 2018 exceeded 2 billion euros" - said Shepp on Thursday, whose statement was received by Interfax.
According to him, due to the weak ruble exchange rate, many firms have found it interesting to open production in Russia. "They ( foreign entrepreneurs ) use the great potential of the largest country in the world with a population of over 140 million people, and they are gradually oriented towards export," said the head of the VTP.
He noted that by the end of the year, the Chamber was able to increase the number of its members by about 5% to 873 firms. “Thus, VTP is by far the largest foreign business association in Russia,” said Shepp.
The total number of companies with German participation registered in Russia decreased from 6,300 in 2011 to 4,661, or by 26%, Shepp noted.
"We are witnessing in this process a gradual cleansing of the market. This is a consequence of the sanctions policy and relatively weak economic growth of previous years. However, new counting methods play a significant role," said Shepp.
He also noted that the number of German firms registered in Russia decreased from 4,965 to 4,661, or by 6.1%. "The quantitative decline, which began after the Ukrainian conflict and the introduction of mutual sanctions, is compensated by qualitative growth," said the head of the CTP.
64 RUSSIA Country Report February 2019 www.intellinews.com