Russia's Economic Tightrope: Navigating Sanctions and Investments
Foreign direct investment in Russia has sharply declined, with the St Petersburg Economic Forum offering little hope for revival. Sanctions and the war in Ukraine have deterred Western investors, as Russia looks to 'friendly' nations to support its economy. Despite potential post-war opportunities, risks remain high.
The sharp decline in foreign direct investment (FDI) in Russia has become increasingly evident, according to recent U.N. data. As the country hosts its premier economic forum in St Petersburg, prospects of an economic revival appear bleak amid an ongoing Western investor exodus.
Russia's pivot towards 'friendly' countries like China and India has not offset the massive drop in Western investments. Despite increased defense spending stabilizing the economy, FDI fell by 62.8% to $3.35 billion in 2024, almost halving foreign holdings since the Ukraine invasion.
Experts attribute Russia's dwindling investment appeal to deteriorating property rights and political uncertainties. Commentators note that even an end to the conflict wouldn't erase these risks, with domestic and Western businesses looking for strategic opportunities amidst a challenging economic landscape.
(With inputs from agencies.)
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