Almost no foreign direct investment (FDI) entered Russia in the first quarter of this year, compared to the $10.3 billion foreign companies invested in the country in the same period last year, the Bank of Russia said this week, according to bne Intellinews.
This $200 million in FDI in January-March almost certainly understates the real FDI, which was most likely negative, the news outlet writes, as a quirk of Russian national statistics means that foreign companies working and registered in Russia that reinvest their profits – as almost all of them do – is counted as FDI. As the number of foreign firms working in Russia is significant – Germany alone has 4,500 companies that invested a record 3 billion euros in 2019 – the real FDI numbers are likely to be negative.
FDI numbers are very confusing and made more complicated by the fact that the Bank of Russia reports only on “last mile” investment: the country of origin of FDI is counted as the country that investment came from before crossing the border to Russia, bne Intellinews writes.
The central bank also reported that the securities market has seen massive outflows in the last quarter. Portfolio investments showed an outflow of $1.2bn compared with an inflow of $6.8bn a year earlier. However, here too the statistics are distorted by taking aggregates.
Equity and bond markets around the world have been rocked in the last month by the double whammy of oil price collapse and the coronavirus (COVID-19) pandemic. The Institute of International Finance (IIF) reports that there has been an all-time record outflow of $83 billion since the start of the year, although this has started to slow in the last few weeks. While the aggregate outflow from Russia may be $1.2 billion in the last quarter, according to the regulator, in just the third week of March Russia saw an all-time record $1.4 billion of outflows regarding its combined equity and bond funds.