GERMAN INVESTMENT IN RUSSIA RISES 26%
The German-Russian Chamber of Foreign Trade [ANK] sees good prospects in Russian business despite sanctions.
We note: The German-Russian Chamber of Foreign Trade is the representative of German companies in Russia and Russian companies in Germany. It currently has 874 member companies, making it the largest foreign trade association in Russia. The number of companies with German equity participation in Russia at the end of 2018 was 4,461.
Facts on the ground give a reality that is in stark contrast to the EU Parliament’s passage of the Latvian resolution: “Today [March 12], five years after the occupation of Crimea, we stress that there is no return to business as usual until Russia fully restores the territorial integrity of Ukraine. We need to reassess the basis of our relations with Russia as it can no longer be considered a strategic partner.”
The ANK report follows:
German companies invested so heavily in Russia last year that their net direct investment increased by 26% to € 2 billion compared to the previous year. This is evident from statistics of the German Federal Bank, which were analyzed by the AHK.
Broken down by quarters, the following picture emerges:
1st quarter: 1.035 billion euros
2nd quarter: – 140 million euros
3rd quarter: 1.621 billion euros
4th quarter: – 438 million euros
The fourth quarter saw an investment decline as cash flows tended to be lower in recent months. In addition, profits generated at the end of the year will be transferred back to the parent companies in Germany.
“The total value is one of the highest since the collapse of the Soviet Union,” said AHK CEO Matthias Schepp. “Russia is a big market and an interesting land for investment.” The low ruble exchange rate and a high level of education are good prerequisites for building or buying a factory in the largest country in the world. In the Doing Business Index of the World Bank, Russia has improved from 124th place to 31st place since 2011.
“The economic reform movement has not derailed despite the internal political hardening and the ongoing confrontation with the West,” says Matthias Schepp. “In some areas, under pressure from relatively low oil and gas prices and Western sanctions, the Russian government has succeeded in significantly improving the investment climate.”
According to the latest business climate survey conducted by the AHK and the East-East European Association (OAOEV), 56% of German companies operating in Russia have increased their turnover and one in three plans to invest further in 2019.
German-Russian trade also rose by 8.4% to € 61.9 billion in 2018, returning to its highest level of € 81 billion in 2012. The positive development is also reflected in the number of members of AHK, which has grown by 10% to 874 companies over the past two years.