Foreign investment in Russia’s crumbling economy has crashed to a 15 year low as global businesses continue to pull their money from the country.
Prior to Vladimir Putin’s decision to launch his full-scale invasion of Ukraine, foreign direct investment in Russia totalled around £403 billion.
However, over the past three years, that total has almost halved to £211 billion as investors continue to desperately flee the country.
Russia lost £111 billion in the first year of the full-scale war, another £64 billion in 2023 and a further £35 billion last year, according to data from the country’s Central Bank.
In the wake of swingeing sanctions, many Western firms pulled their investments from Russia.
Western capital was heavily invested in Russia’s mineral extraction and processing industries, which account for 50% of the countries GDP and 40% of employment.
Putin had hoped that “friendly countries”, particularly from the BRICS alliance, would take up the slack and pour money into Russia.
But this has not been the case, with even China cooling its investments in the Russian economy.
BRICS is an intergovernmental association made up of 10 countries including Russia, China and India.
Beijing has prohibited Chinese companies from investing in Russia’s energy sector, refused to invest in the Power of Siberia-2 gas pipeline and ordered its car companies not to build manufacturing plants in the country.
China is by far Russia’s largest trading partner, exporting £93 billion worth of goods last year – an increase of 4.1% on 2023.
Russia sold £104 billion worth of goods over the course of last year, the same amount as in 2023.
Beijing has already moved to make it harder for Russian companies to purchase so-called dual-purpose products and chemicals, in a major blow for Putin’s war machine.
China’s government implemented an expanded list of dual-use commodities subject to export controls at the beginning of December.
IT equipment, particularly servers and components, have been added to the list, as has argon gas which is used in welding.
Under the new laws, Chinese enterprises that export dual-use products to Russia would face a 25% tariff.
