INTERVIEW: “The weekend’s protests were the Russian people's, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
@russian_market sacked by UBS for supporting Navalny
Elbrus Capital attracts major international players to invest in the Russian digital sphere
Russian President Vladimir Putin and US President Joe Biden have first phone call, extend START II treaty for five years
ING: Russian budget’s modest deficit leaves fiscal room for 2021
Public support is collapsing for The People’s Servant Party
Ukraine’s industrial output jumped 4.8% y/y in December
State-owned Ukrgasbank signs off on convertible €30mn IFC loan ahead of its privatisation
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Estonia's two big parties agree on grand coalition
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
Czech billionaire Kellner´s PPF makes another bid for Moneta Money Bank
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Polish parcel locker operator InPost soars in Euronext Amsterdam debut
Polish industrial production continues boom in December
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
BALKAN BLOG: Only better waste management can clean rivers of trash
Pandemic pushes public debt close to 80% of GDP in Albania and Montenegro
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Bulgaria’s latest nuclear u-turn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegro’s special prosecution probes finance minister over €750mn Eurobond issue
North Macedonia’s state-owned loss-makers await new owners
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romanian cybersecurity company Safetech floats shares amid rising investor interest
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
EBRD and WBIF support fast broadband in rural Serbia
Slovenia plans region's longest-tenor Eurobond
Slovenian crypto payment system enters Thai market
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
Slovenia lost €10bn by neglecting wood industry for decades
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
Following war with Armenia, Azerbaijan gains control of lucrative gold mines
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Azerbaijan
OUTLOOK 2021 Georgia
“Try me” not telecoms minister Iran’s president tells hardliners in internet row
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
COMMENT: Mongolia is an island of democracy
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Tajikistan: Writing for the president is on the wall (and then scrubbed off)
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
Russia received almost zero foreign direct investment (FDI) in the first quarter 2020, dropping from $10.3bn in the same period a year earlier to $200mn, the Central Bank of Russia (CBR) reported on April 13.
This number almost certainly understates the real FDI, which was most likely negative. As bne IntelliNews has reported, 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 companies working in Russia is significant – Germany alone has 4,500 companies that invested a record €3bn in 2019 – the real FDI numbers are likely to be negative.
Thanks to the perennial “Russia risk”, FDI into Russia has always been below par given the size of the population and richness of the resources on offer. However, in the last three decades Russia had accumulated a total FDI stock of just over $407bn as of the end of 2018, according to the CBR.
However, Russia has never been a popular investment destination. Inward FDI to Russia over 2014-2018 averaged 1.3% of GDP, the lowest levels for 20 years when reinvestment is factored in, and even Russians are reluctant to invest in their own country.
FDI numbers are very confusing and made more complicated by the fact that the CBR 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.
The United Nations Conference on Trade and Development (UNCTAD) published first-ever estimates of FDIs into the economies based on Ultimate Investing Country in 2017, Ivan Tkachev, economics editor at RBK, recently wrote in a piece in the Riddle entitled “A Quiet Revolution in the Analysis of Foreign Investments.” This study attempted to identify the country that the money started from, not the last step on its journey. The result was startling, as it turns out the biggest investor into Russia is the US, and all the CBR’s statistics are massively distorted.
The CBR 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 $83bn 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 $1.2bn in the last quarter, according to the CBR, in just the third week of March Russia saw an all-time record $1.4bn of outflows regarding its combined equity and bond funds.
The numbers are further distorted by the FX effects of the sharp devaluation of the ruble. The collapse of the oil prices immediately translated into a fall in the ruble’s value from c.RUB62 to the dollar at the end of February to a low of RUB80 only a few weeks later. As revenues are in dollars and rubles and the CBR also has a large share of monetary gold as a reserve, all the leading capital flows and reserves numbers are affected by FX effects as valuations had to be adjusted for the devaluation effects. For example, Russia’s gross international reserves (GIR) fell by $7bn in the first weeks of April, but the actual dollars in cash the CBR spent to prop up the ruble was about $2.5bn. The rest of the fall was due to revaluation effects.
“The most interesting thing in the balance of payments is the reduction of oil and gas exports by almost a quarter, primarily due to the warm winter. But Russia's foreign debt by April 1 [had] decreased by 8%, to $450bn, or about 29% of GDP. Here the main reason is the revaluation due to the devaluation of the ruble,” VTB Capital (VTBC) said in a note.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: