Russian government pins big hopes on the increase of volume in foreign investments
Russia is becoming more attractive for investments, as the international Fitch rating agency has improved the outlook of the country’s “BBB-” rating from stable to positive, which corresponds to the lowest level of the investment category.
That became possible mostly due to Russia’s ongoing progress in the strengthening its economic policy, which included successful implementation of the Ruble exchange floating rate policy, as well as fulfillment of state commitments of achieving the inflation target. In addition, in recent years budget strategy of the country has been significantly improved.
This combination of factors has already resulted in better macroeconomic stability and strengthened Russian economy to shocks.
Analyst of the Russian Ministry of Economy expect the country’s budget deficit will drop to 2% of GDP from 3.4% of GDP in 2016 and to 0% in 2019. This should create conditions for the increase of foreign investments.
Analysts of the Ministry of Economy predict Russia’s economic growth will continue in 2018-2019, but will be weak. The growth will be supported by reducing of financial uncertainty in the country, easing of monetary incentives, further strengthening of the Ruble and a favorable outlook for oil prices.
Presidential elections in Russia, planned for 2018, should lead to more broader reforms of the country’s national economy and provide additional impetus for its growth.
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The ever-growing investment attractiveness of the Russian economy is also confirmed by the growing number of transactions and projects, involving participation of foreign investors in many sectors of the Russian economy.
Head of the American Chamber of Commerce in Russia Alexis Rodzianko said international rating agencies today underestimate the quality of Russian risk.
“All agencies underestimate the quality of Russian risk: the market goes ahead: the interest of agencies is overtaken by the interest of investors,” Rodzianko said, adding that he sees no reason for reduction Russia’s investment rating in the middle-term.
In recent years a shortage of foreign direct investments in the Russian economy has been one of the most pressing problems for the Russian economy. If in 2012, Russia ranked the world’s third country in terms of the annual volume of direct foreign investments after the US and China, then by the beginning of 2016 it left the top 20.
Maxim Oreshkin, head of the Russian Ministry of Economy said the government puts big hopes on the increase of the volume of foreign investments in the national economy this year.
The Russian economy needs about RUB 5 trillion (US$75 billion) annually in order to ensure its annual growth on the level, which is higher the average global figures – Oreshkin says – The main goal is to convince foreign investors of good prospects of their Russian investments.
In the short-term, analysts of the Russian Ministry of Economy expect the growth of Chinese investments in the Russian oil and gas sector, because of the restrictions introduced by the Chinese government on the investments of domestic business into the Western real estate, hotel, entertainment, sports and other business.
Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>