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Investments in Russia

Investment Summary | Investment in Fixed Capital | Foreign Direct Investment | Investment in Non-Financial Assets | Gross Capital Formation | Portfolio Investment | Venture Capital Investment | Investment Projections | Definition of Investment | Datasheet | Sources |


Last updated: October 5, 2017


Investment Indicators

Investment in Fixed Capital

Foreign Direct Investment (FDI)




Investment Indicators



There are two major investment indicators that are commonly considered to reflect development of Russia in terms of investment:

Important note: if not stated otherwise, when mentioning investment changes in a specific year the Russian mass media, experts and authorities typically refer to changes in investment in fixed capital.



Investment in Fixed Capital



Dynamics of Fixed Investment

Volumes of Investment in Fixed Capital in Russia in 2013-2016

IndicatorUnit2013201420152016
Volume of Investment in Fixed CapitalRUR trillion13.4513.913.89714.640
Volume of Investment in Fixed CapitalUSD trillion0.420.360.2280.218
Share of Investment in Fixed Capital in GDP*%19.5%20.6%17.1%17.0%
Gross Fixed Capital Formation (GFCF, the World Bank data)USD trillion0.4510.4380.2830.27
Share of Gross Fixed Capital Formation (GFCF) in GDP%20.2%21.4%21.9%21.04%

* SNA 1993 for 2013 data, SNA 2008 for 2014-2016 data.

Sources: the World Bank (GFCF), the Russian State Statistics Service (data for 2015 revised on January 24, 2017), calculations of Factosphere.


Dynamics of Investment in Fixed Capital in 2005-2016


Source: Russian Federal State Statistics Service.

Please, refer to Definition of Investment section on comparison of investment in fixed capital and gross fixed capital formation (GFCF).


Dynamics of Gross Fixed Capital Formation in Russia in 2005-2016


Source: The World Bank.

Over the recent years the dynamics of investment in fixed capital in Russia have been hit by geopolitical tensions and collapsing oil prices. Besides that, the following structural problems in the national economy led to diminishing growth and then continuing contraction in investment in fixed capital (opinion of factosphere.com):

Despite the slight growth in nominal terms, the Russian investment in fixed capital was declining rapidly in the real terms over 2014-2016 with the major slump falling at 2015 (-10.1%). In the first half of 2016 the pace of decline slowed down, and in 3Q 2016 the slightly positive dynamics have been registered for the first time in years empowering hopes of gradual recovery. In 2017 the continuous revival started, and the investment growth reached 6.3% in the second quarter (4.8% growth for the first half of 2017). The outstanding growth in 2Q 2017 is attributed to increased purchases of foreign equipment due to appreciating rouble and implementation of several large state-backed infrastructure projects (Sila Sibiri gas pipeline and Kerchensky bridge to Crimea).


Quarterly Dynamics of Investment in Fixed Capital in 2014-2017 (Russian State Statistics Service)


Source: Russian Federal State Statistics Service. Please, note that quarterly data for 2015 have not been yet updated by the Service to comply with revision of annual estimate for 2015 made on January 24, 2017[1].

As it comes to the short-term projections, the major part of experts expect the moderate growth of fixed investment for 2017 with the projections’ median at about 2.2% and similar growth in 2018. The released statistical data for the first quarters of the year, however, encourage for much more optimistic projections to appear closer to the year end.

In case the existing status quo is retained, we are likely to evidence quite moderate investment growth in the several upcoming years due to the following reasons (opinion of factosphere.com):

The medium-term developments are hardly predictable due to outstanding influence of a number of both external and internal factors of uncertainty. Among the most important factors the following ones can be mentioned:

Short-Term Projections of Fixed Investment Growth* (2017)

Forecast SourceLast UpdatedInvestment growth / contraction projection, %
Medians and Spreads of Available Projections
Median of projections made over July-October 201702.10.20173.55
Spread of projections made over July-October 201702.10.20172.1 ÷ 5.2
International Organisations
The World Bank (Gross Capital Formation)23.05.20178.0
The World Bank (Gross Fixed Capital Formation)23.05.20172.0
IMF10.07.20172.5
European Commission (Gross Fixed Capital Formation)11.05.20171.7
OECD (Gross Fixed Capital Formation)07.06.20172.0
State Authorities
Ministry of Economic Development (baseline scenario)31.08.20174.1
Ministry of Finance (baseline scenario)28.10.2016-0.5
Russian Central Bank (baseline scenario, Gross Fixed Capital Formation)15.09.20174.0 ÷ 4.5
Consensus projections
Reuters poll02.10.20174.0

*In selected cases other investment indicators are presented as specified.

Medium-Term Projections of Fixed Investment Growth*

Institution / CompanyUpdated201820192020
Medians and Spreads of Available Projections (2018)
Median of projections made over July-October 201702.10.20172.1--
Spread of projections made over July-October 201702.10.20171.0 ÷ 4.7--
International Organisations
The World Bank (Gross Capital Formation)23.05.20171.51.1-
The World Bank (Gross Capital Formation)23.05.20172.53.5-
IMF10.07.20171.01.0-
European Commission (Gross Fixed Capital Formation)11.05.20172.1--
OECD (Gross Fixed Capital Formation)07.06.20171.6--
State Authorities
Ministry of Economic Development of Russia (baseline scenario)31.08.20175.76.78.6
Ministry of Finance of Russia (baseline scenario)28.10.2016-0.50.91.6
The Russian Central Bank (baseline scenario, Gross Fixed Capital Formation)15.09.20171.0 ÷ 1.51.0 ÷ 1.52.3 ÷ 2.8
Other Medium-Term Projections
Reuters poll02.10.20173.72.5-
Standard & Poor’s17.03.20171.82.32.3
Analytical Credit Rating Agency (ACRA)28.03.20170.31.21.3
Centre for Development of Higher School of Economics (baseline scenario)15.05.20172.22.82.9
Institute of National Economy Forecasting of the Russian Academy of Sciences (inertial scenario)17.05.20172.23.7-
Gaidar Institute (inertial scenario)28.07.20172.11.9-
VneshEconomBank (VEB, baseline scenario)22.09.20172.32.83.2

*In selected cases other investment indicators are presented as specified.

Weekly Changes in Fixed Investment Growth Projections

In this section we offer historical weekly median, minimum and maximum of fixed investment growth projections for the current year and the following year processing all sources traced by Factosphere. Projections for both investment in fixed capital and Gross Fixed Capital Formation are considered. Please, note that when calculating appropriate values for the date, we consider solely projections made in the current month and the previous three months (the most recent projection for each of sources).

Weekly Changes in the Russian Fixed Investment Growth Projections for 2017 Traced by Factosphere

DateMedian,
% to previous year
Min,
% to previous year
Max,
% to previous year
Number of assessed projections
02.10.2017+3.55+2.1+5.26
25.09.2017+3.0+2.0+5.27
18.09.2017+2.75+2.0+4.56
11.09.2017+2.5+2.0+4.15
04.09.2017+2.5+2.0+4.15
28.08.2017+2.15+1.7+5.410
21.08.2017+2.15+1.7+5.410
14.08.2017+2.15+1.7+5.410
07.08.2017+2.15+1.7+5.410
31.07.2017+2.15+1.7+5.410
24.07.2017+2.1+1.7+5.410
17.07.2017+2.1+1.7+5.410
10.07.2017+2.1+1.7+5.410
03.07.2017+2.0+1.7+5.48
26.06.2017+2.0+0.3+5.411
19.06.2017+2.0+0.3+5.411
12.06.2017+2.0+0.3+5.411
05.06.2017+2.0+0.3+5.410
29.05.2017+2.0+0.3+5.410
22.05.2017+2.0+0.3+5.49
15.05.2017+1.8+0.3+2.87
08.05.2017+1.8+0.3+2.87
01.05.2017+1.75+0.3+2.86
24.04.2017+1.8+0.3+3.37
17.04.2017+1.8+0.3+3.37
10.04.2017+1.8+0.3+3.36
03.04.2017+1.8+0.3+3.35
27.03.2017+1.8+0.3+3.37
20.03.2017+1.8+0.9+3.36
13.03.2017+1.8+0.9+3.35
06.03.2017+1.8+0.9+3.35
27.02.2017+1.65-0.5+6.0*8
20.02.2017+1.65-0.5+6.0*8
13.02.2017+1.65-0.5+6.0*8
06.02.2017+1.8-0.5+6.0*7
30.01.2017+1.8-0.5+6.0*11
23.01.2017+1.8-0.5+6.0*10
16.01.2017+1.8-0.5+6.0*10
09.01.2017+1.8-0.5+6.0*10
26.12.2016+1.5-4.5+6.0*14
19.12.2016+1.5-4.5+6.0*14
12.12.2016+1.5-4.5+6.0*14
05.12.2016+1.5-4.5+6.0*14
28.11.2016+1.9-4.5+6.0*14
21.11.2016+1.9-4.5+6.0*14
14.11.2016+1.9-4.5+6.0*14
07.11.2016+1.95-4.5+4.413
31.10.2016+1.95-4.5+4.413
24.10.2016+1.95-4.5+4.412
17.10.2016+1.9-4.5+3.011

* Gross Capital Formation (the World Bank).
Source: Calculations by Factosphere.

Weekly Changes in the Russian Fixed Investment Growth Projections for 2018 Traced by Factosphere

DateMedian,
% to previous year
Min,
% to previous year
Max,
% to previous year
Number of assessed projections
02.10.2017+2.1+1.0+4.76
25.09.2017+1.85+1.0+4.77
18.09.2017+1.6+1.0+4.76
11.09.2017+1.85+1.0+4.75
04.09.2017+1.85+1.0+4.75
28.08.2017+2.2+1.0+2.510
21.08.2017+2.2+1.0+2.510
14.08.2017+2.2+1.0+2.510
07.08.2017+2.2+1.0+2.510
31.07.2017+2.2+1.0+2.510
24.07.2017+2.2+1.0+2.510
17.07.2017+2.2+1.0+2.510
10.07.2017+2.2+1.0+2.510
03.07.2017+2.2+1.6+2.58
26.06.2017+2.2+1.2+3.011
19.06.2017+2.2+1.2+3.011
12.06.2017+2.2+1.2+3.011
05.06.2017+2.25+1.2+3.010
29.05.2017+2.25+1.2+3.010
22.05.2017+2.2+1.2+3.09
15.05.2017+2.3+1.2+3.07
08.05.2017+2.3+1.1+3.07
01.05.2017+2.25+1.1+3.06
24.04.2017+2.3+1.1+3.07
17.04.2017+2.3+1.1+3.07
10.04.2017+2.25+1.1+3.06
03.04.2017+2.3+1.1+3.05
27.03.2017+2.3+1.1+3.07
20.03.2017+2.4+1.1+3.06
13.03.2017+2.5+1.1+3.05
06.03.2017+2.5+1.1+3.05

Source: Calculations by Factosphere.



Foreign Direct Investment (FDI)



FDI Dynamics

International sanctions, deteriorating investment climate, slump in private consumption and decreasing volumes of capital round-tripping due to introduction of the new regulations on controlled foreign companies have been among the key drivers of the outstandingly negative FDI dynamics in the recent years. In 2015 the Russian FDI inflows contracted tenfold as compared to 2013 to USD 6.8 billion, while the restoration of 2016 to USD 33 billion was primarily driven by the sale of 19.5% shareholding in Rosneft, the largest Russian oil company, for about USD 11 billion.

Relying on available FDI inflows statistics for the three quarters of 2016, we can expect a bit better cumulative performance of FDI for the whole year. Besides that, FDI inflows for the year shall be contributed in a major way by Rosneft transaction (19.5% shareholding was acquired by Glencore and Qatar Investment Authority) that took place in the end of 2016 with announced value at about USD 10.2 billion. According to the UN Investment Trends Monitor, the Russian FDI inflows are estimated to increase to USD 19 billion.[2] Despite the positive trend, the Russian FDI dynamics still remain very much inferior to the volumes demonstrated by the growing emerging economies like India and China.


Quarterly Dynamics of FDI Net Inflows and Outflows to/from Russia in 2011-2015


Source: UNCTAD (United Nations Conference on Trade and Development), Central Bank of Russia.


Quarterly Dynamics of FDI Net Inflows and Outflows to/from Russia in 2015-2016


Source: Central Bank of Russia.

Important note: negative FDI net inflows mean that divestment is greater than investment in the specific period.

FDI Projections

The revival of FDI flows in the coming years will depend upon both external factors (prolongation of sanctions, outcome of conflict in Ukraine, dynamics of oil prices etc.) and internal factors (implementation of economic and organisational reforms aimed at improvement of investment climate, effective domestic monetary policy, etc.). There are also emerging risks and challenges for FDI such as participation of Russia in conflict in Syria with its possible effect on foreign affairs, as well as MNCs reassessing their strategy within the Russian ailing economy[3].

The introduction of the law on controlled foreign companies (CFC) in the end of 2014 may also have negative impact on FDI inflows due to further decrease in still outstanding volumes of capital round tripping in Russia (see also FDI Breakdown by Country section). The increasing number of Russian offshore companies owners are either considering shutting down their offshore businesses or not willing to re-invest in the Russian economy, while a part of them are considering leaving Russian residency for tax avoidance purposes. According to results of dedicated survey of Egorov, Puginsky, Afanasiev & Partners, the leading Russian law firm, 40% of CFCs’ beneficiaries decided to leave the Russian tax residency by June 2017, while 9% transferred assets to non-resident relatives.[4]



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