BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/32
The latest report from the UN agency UNCTAD finds that the flow of foreign direct investment into Russia last year slowed substantially to just $10 billion, about a third of levels in recent years. Most of last year’s inflows consisted of re-invested earnings. The flow of new investment was very small.
Falling oil prices and geopolitical tensions, as well as additional restrictions on foreign media ownership, have dampened interest in new investment in Russia and caused some firms to pull back on investment (e.g. General Motors and Raiffeisen Bank) or pull out from the Russian market altogether (e.g. ConocoPhillips and Axel Springer).
The global flow of direct investment rose nearly 40 % last year. Only 0.6 % of global direct investment went to Russia. Russia’s share in earlier years was about 2 %. The outflow of FDI from Russia to other countries was $27 billion last year, less than half the outbound FDI of 2014.
FDI flows to Kazakhstan fell last year by nearly half of the 2014 level. FDI flows to Ukraine, however, increased substantially from the previous year, when they hit a record low.
Foreign direct investment flows to BRIC countries in 2010, 2015
Source: UNCTAD WIR 2016.