Growth in recent years: how the inflow of foreign investment in Moscow has changed over the past 10 years
2021-01-11 05:08

Growth in recent years: how the inflow of foreign investment in Moscow has changed over the past 10 years

The total amount of foreign investments accumulated by Moscow in the city in 2020 is more than 260 billion dollars. We are talking about investments of foreign companies in fixed capital. The key financial donors with the largest investment portfolios come from the USA, China and Germany. This information was provided by the head of the Moscow Mayor's Office for Foreign Economic Relations Sergei Cheremin.

Continuous growth over the past 10 years

Moscow has been steadily increasing the volume of foreign investment over the past ten years - said Cheremin. From 2010 to 2020, the inflow of foreign money invested in fixed assets increased by 112%. At the beginning of 2020, all accumulated investment was more than $260 billion, the official cited official data from the Central Bank while speaking at a conference on "Economic and Investment Cooperation between Moscow and Beijing."

Until the start of the Covid-19 pandemic and the related collapses of global markets, investors from around the world were only increasing their interest in investing in Moscow's promising projects. Thus, in 2019, foreign capital came to Russia in a record amount - the funds of foreign investors were invested in 191 objects. Russia, which for several years in a row has been in the top 20 most attractive countries in terms of investment, broke into the top ten, taking 9th place.

Moscow has always held a special place in the structure of foreign investments - the capital accounts for almost half of the total volume of foreign investments in Russian facilities. Leonid Kostroma, the head of the Municipal Agency for Investment Management, shared the details of the foreign investment activity in Russia and Moscow in recent years. According to him, the largest investments in the capital's economy came from Germany, Austria, USA, Finland, Italy and France.

From the point of view of activities, the greatest interest of foreign investors caused capital companies operating in trade, insurance and financial activities, industrial production and high technologies. Separate large item in the volume of foreign money is real estate, which has always been in strong demand.

Leonid Kostroma also underlined that Moscow authorities direct serious efforts to stimulate the flow of foreign investments into the capital. It is extremely positive moment, contributing to the city development and creating new jobs. Therefore, new investment projects have received multifaceted support from the government. In particular, new undertakings with the attraction of foreign investment capital into the capital's industrial production were supported by the State with tax benefits for land, profits and property. Investors could also count on compromises in terms of rent for land plots.

The results of all these years of investment growth can be assessed as extremely successful. This is evident from the number of major foreign manufacturers who have concentrated their production in Moscow. Here such prominent brands as Renault - the French group of companies has placed its own car assembly plant in the Russian capital. Other prominent players in the world market have also set up their production facilities in Moscow: Bartholet Maschinenbau AG (Switzerland), Orpea Group (France), and the German concern KSB.

One of the most promising areas for investment has been and remains real estate. And Moscow objects all these years have been of great interest to the inflow of foreign capital.

The situation in the crisis year of 2020

The past year 2020 was the most difficult for all economies of the world in terms of investments for obvious reasons. The pandemic, associated total border closures, disruption of international trade relations, and a host of other restrictions all had a dramatic effect on the migration of foreign capital at the beginning of the year.

Thus, in the first half of 2020, the inflow of foreign capital into the economy of Moscow practically stopped - it decreased 50 times compared to the same period in 2019. This happened precisely during the most acute phase of the global crisis, when the toughest restrictions were imposed. At the same time, the global energy crisis began due to the natural decline in demand for energy - in January-March, exports fell by a quarter.

The situation began to level off and clear up in the second half of 2020, when countries partially recovered from the first wave of the pandemic and the uncertainties associated with it. Thus, while a total of slightly more than $19 billion of investment money was withdrawn, there was still a tangible increase in foreign investment in the capital's facilities - about $26 billion. Thus, the balance of direct investment from abroad remained positive, and amounted to 6.8 billion dollars. This is the highest indicator on the background of the level of foreign investments at that time in the context of the whole country.

The above data were obtained from official reports of the Central Bank, and they take into account direct foreign capital flows, reinvestments, debt instruments and other factors. The above data on the total accumulation of foreign investment in Moscow at $260 billion was given above. Excluding debt instruments and financial activities, the total net accumulated foreign capital is 173.1 billion U.S. dollars.

In terms of accumulated investment of all the subjects of the Central Federal District, Moscow with a large gap takes first place. The Moscow Oblast with $19.4 billion of investments follows the Russian capital, followed by the Lipetsk Oblast with $12.5 billion and the Kaluga Oblast with $3.4 billion. The Kostroma Oblast with $2.1 billion of investments crowns the top five.