Foreign direct investment inflow to Russia last year was lower than in 2009

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/24

​Inbound foreign direct investment flow to Russia last year fell to $21 billion, down from an average of $55 billion a year during 2007–2013, and even well below the $37 billion registered during the crisis year of 2009. Supported by the early months, the FDI flow was still positive for the year as a whole, but in second-half net FDI flows turned negative, i.e. more investment flowed out of Russia than into Russia.

As usual, the largest inbound flows came from Cyprus, the Bahamas and the British Virgin Islands. Many large Russian firms are registered or have subsidiaries in these countries for e.g. tax purposes, and a large share of investment flows into Russia from these countries is apparently of Russian origin. Largest FDI flows went last year to the service sector, particularly finance and insurance and trade.

FDI outflows from Russia amounted to $56 billion last year, which was close to the annual average for 2007–2013. The flow of outbound FDI was about the same in all four quarters of 2014. Cyprus was the top destination, accounting for nearly half of outbound FDI (and tripling from a year earlier as the economic situation of Cyprus was more stable than in 2013). High growth was also seen in investment flows to other major destination markets. For example, Russian FDI flows doubled to the United States and quadrupled to Switzerland.

Quarterly flows of inbound FDI to Russia, USD billion
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Source: Central Bank of Russia

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