BOFIT Viikkokatsaus / BOFIT Weekly 2017/28

Preliminary 2Q17 balance of payments figures indicate that the net private sector capital flow turned slightly in favour of Russia, a rather exceptional situation in recent years.

The net flow of capital to Russia’s corporate sector (excluding banks) was notably positive. This was due mainly to direct investment flows both into and out of Russia. In the second quarter and the first half overall, foreign direct investment flow into the corporate sector was up slightly from recent years (if the sale of a large stake in Rosneft oil company, which greatly boosted the 4Q16 FDI figures, is omitted). On the other hand, FDI inflows in the first half only equalled about 2 % of Russia’s half-year GDP. Russian firms, in turn, made considerably less direct investments abroad in the second quarter than in previous years.

Second-quarter capital outflows from Russia’s banking sector were rather hefty as banks continued to pay down their foreign debts at a brisk pace.