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Foreign Investors Return to Old Strategy

February 26, 2008 | www.kommersant.com

Data published by Rosstat Friday on the structure and volume of foreign investment in Russia in 2007 indicate steady growth in investment in the economy of Russia. Rosstat, the state statistics service traditionally uses its own analytical methods on investment flows that differ from the methods of the Central Bank and government. According to Rosstat, the total volume of investment entering Russia in 2007 was $120.9 billion, which agrees with the Central Bank's calculation of the net influx of capital.

Comparing the data on investment in Russia, it can be said that the negative tendencies of 2006 linked to the YUKOS case have been overcome. In 2007, the share of trade credits fell by 16.8 percent of the total sum of investment in the Russian economy to 11.6 percent, compared to 11.2 percent in 2005. At the same time, the share of short-term and long-term credits (the latter accounted for more than three-quarters of all non-trade credits in 2007) returned to its previous level. Between 2002 and 2005, it was more than 60 percent of all investment. In 2006, it fell to 51.6 percent and, in 2007, according to Rosstat, it rose to 61 percent.

The Rosstat figures show that the role of state companies' borrowing in the influx of capital in 2007 increased somewhat. The boom in crediting them beyond the borders of Russia coincides with in its parameters with the increase in investment in Russia through other channels. From the point of view of Russian creditors, the structure of the investment flow into Russia did not change in connection with its expansion. In 2003, the share of direct foreign investment hovered around 23 percent. The only substantial change has been in portfolio investment in the economy. According to Rosstat, it increased 3.5 percent in 2007, compared to 5.8 percent in 2006. Those figures seem to reflect investors' preferences. The forms in which they invest in financial instruments in Russia has changed substantially since 2004.

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