Investment in Russia picks up ahead of political thaw
Data from 2016 suggest oil price recovery aided foreign investment boost
Source: Central Bank of Russia; Forbes Magazine
Outlook
While substantive political rapprochement with the United States will take time, investor confidence in Russia has picked up in anticipation of better bilateral relations, aided by a recovery in oil prices and a sense that Moscow’s economic and monetary policies are stable.
Central bank figures show that at 6.7 billion dollars, FDI in January-June 2016 was higher than the 6.5 billion dollars for the whole of 2015. President Donald Trump’s election victory gave investors further confidence in the Russian market: Forbes Magazine reports foreign net inflows of 470 million dollars into Russian stock in January.
More investors will look at Russia if conditions improve and sectoral sanctions are eased.
Impacts
- The hydrocarbons sector needs Western technical know-how that will come if sanctions end.
- The Rosneft privatisation sale shows Russia can attract foreign investment funds.
- The way sanctions are enforced will inform wavering investors as much as the formal regulations.