Foreign investment flowed out of the Belarusian economy Les investissements étrangers ont quitté l'économie biélorusse.

While in Q1 the country saw an inflow of foreign direct investment on a net basis, in Q2 IT was replaced by an outflow.

 

In order to track the real flows of foreign direct investment, the authorities use the indicator of foreign direct investment on a net basis. Prior to 2021, this indicator was included in the list of key forecast indicators.

 

Foreign direct investment on a net basis is the inflow of foreign direct investment without any indebtedness to the direct investor for goods, works, and services, less withdrawals of foreign direct investment. It is the balance of investments adjusted for the flows of organizations, whose shares or stocks in authorized capitals were owned by the state and sold to non-residents.

 

As can be seen from the definition, debt instruments are not taken into account when calculating direct investments on a net basis. Such debt instruments usually include loans, borrowings, receivables, payables, financial leasing, etc. This is logical, as debts have to be repaid and investments can stay in the country for an indefinite period.

 

In the first quarter of 2021, Belarus received $1.247 billion of foreign direct investment on a net basis.

 

In the first half of the year, this amount decreased to 1.185 billion USD.

 

Since the inflow of investments for 6 months is lower than for 3 months, there was an outflow of investments from Belarus in Q2. In April - June 2021, the net outflow was 62.1 million USD. The outflow was formed by the real sector enterprises - minus $123.3 million per quarter. By the way, in April-June of 2020, there was also an outflow of investments from the country - of 100.5 million USD.

 

The 2nd quarter is generally characterized by a sharp decline in investment flows to Belarus. In spring, large enterprises with foreign capital transferred annual dividends to foreign shareholders. In the CIS region, foreign direct investment in Q2 amounted to only USD 6.2 mln. Among the former Soviet Union countries, the main money came from Russia - 9.5 mln USD.

 

For some other "Soviet" republics there was a withdrawal of money from Belarus. The European Union remains an important economic partner of Belarus. In the 2nd quarter, EU investors withdrew the equivalent of $143.9 million from Belarus on a net basis. The main part of the investment outflow to the EU was provided by Cyprus - minus 84.4 mln USD during the quarter.

 

Also a significant amount in the 2nd quarter went to the Netherlands (minus 39.1 million USD). There was 9.1 mln USD of direct investments on net basis from China in Q2. On the whole, investors from China invested 24 million USD in the Belarusian economy over six months.