Russia and CIS Business Services
Foreign Direct Investment (FDI) inflows into Russia have been impacted by political events and the stresses of flagging investor confidence amid macroeconomic uncertainty.
2013 saw $70bn FDI into Russia, with $8bn forecast for 2016 (Oxford Economics). Continuous growth in consumer markets, and Russia's natural resources has meant it is still a net exporter.
In 2015, exports stood at $343bn and imports at $182bn, making a positive trade balance of $161bn. Russia remains the CIS region’s most attractive FDI destination.
In 2015 the number of FDI projects in Russia grew 61% to 201, and Russia retained eighth position among European countries by FDI level, according to EY’s 2016 European Attractiveness Survey.
Official Russian statistics for 2016 reflect the first evidence of industry recovery, whilst progress has been made to address key investors’ regulatory concerns. Russia was ranked 51st in a recent World Bank Doing Business Index – 11 positions up.
Russian entrepreneurs are also optimistic for the first time in two years, with the Purchasing Managers' Index (PMI) for its Services sector in January 2017 reaching 58.4 points – a 49 month high.
According to the 15th edition of EY’s Global Capital Confidence Barometer, almost 80% of CSE executives believe the global economy looks to remain stable or see modest improvements over the next 12 months, and they have similar expectations for the local economy. However, a number of factors are tempering their enthusiasm. 35% consider political uncertainty the biggest challenge impacting their core business, while 30% see it posing a risk to their M&A strategy.
Western Europe remains Russia’s largest foreign investor, and despite the imposition of restrictions and Russia’s challenging macroeconomic environment, we are seeing an increasing number of FDI projects financed by investors from these countries. In 2015, western European investors put capital into 106 projects – the highest number since 2005, and a growth rate of 77% year on year.
Russia and the CIS have many advantages for foreign investors, such as abundant natural resources and strong domestic markets with well educated, highly productive workforces. However, administrative barriers, lack of transparency in business practices, and a recovering financial system often compromise these benefits.
Our Russian and CIS Business Services Desk can help
We are a UK-based network of experienced bilingual professionals with knowledge of both the UK and CIS corporate environments gained through hands-on experience with major clients.
We bring the benefits of a global organisation and provide exceptional service for CIS and UK-based clients considering investment in the CIS.