Experts named 3 scenarios for foreign investment in Russia

According to the forecast of FIAC experts, the investments of foreign companies will move to growth next year. The highest rates will be in the case of a consumer boom,

Experts from the Foreign Investment Advisory Council (FIAC) predicted how foreign companies' investments in RUSSIA will grow in the next three years. The forecast is given in the October study “International Business in Russia. Course towards sustainable economic development” (available from RBC).

As a basis, experts took three scenarios for the development of the world economy, which Oxford Economics economists consider the most likely:

activity recovery . This is the most likely scenario in which the global economy regains ground lost during the pandemic. The authorities manage to contain the rise in prices caused by the suspension of production and problems with the transportation of products. New strains of covid-19 are emerging , but vaccination curbs their spread and reduces the burden on the healthcare system; protracted pandemic (medium probability). In this scenario, vaccines are less effective against new strains. The population is in no hurry to get vaccinated, and anti-coronavirus restrictions remain for a long time; consumer boom(medium probability). Consumers around the world are starting to spend savings made during the pandemic, starting a new cycle of economic growth. Mass vaccination has reduced economic uncertainty, which is why investors are more risk-averse. Companies are increasing production volumes, and the complexities of managing the supply chain and transporting products are gradually disappearing.

In each of these options, Russia's and the world's GDP will grow in 2021, but Russian growth rates will lag behind the global average. As follows from the FIAC regression model associated with the rate of projected GDP growth, investments by foreign companies will remain at the same level in 2021 and move to growth next year.

The activity of foreign investors in Russia fell to the level of 2014 Business

The fastest growth in the next three years is possible under the third scenario - with a boom in the consumer market. In this case, the volume of foreign investment in Russia will reach 1.6 trillion rubles by 2024, the FIAC predicts.

The slowest growth is expected under a protracted scenario - up to 1.4 billion rubles. In the most probable scenario - economic recovery, the figure will be 1.5 billion rubles.

In 2020, against the background of the pandemic, the number of Russian projects that received investments from abroad fell by a quarter, to the levels of the sanctions in 2014, follows from the calculations of the audit and consulting company EY. Last year, foreign investors invested in 141 projects in Russia, and in 2019 - in 191.

In addition to the pandemic, there was also a specific factor in the country that held back foreign direct investment - geopolitical risks, the study says. In particular, 2020 was marked by increased sanctions rhetoric after the poisoning of opposition leader Alexei Navalny and the victory of Democratic candidate Joe Biden in the US elections.