Investment rolls back in as retailers bank on Russian economic recovery

23/11/2016

FDI RussiaRussian economic recovery: Foreign direct investment into Russia reached $8.3bn in the first nine months of this year, according to data from the Central Bank of Russia (CBR), easily outstripping the $5.9bn reported for the whole of 2015, as foreign retailers began betting that the country’s two-year long recession is coming to an end.
Even before Donald Trump’s surprise victory in the US presidential election raised hopes that sanctions could begin being lifted after he moves into the White House in January, the Swedish flatpack furniture retailer Ikea had committed $1.6bn towards the development of new stores over the next five years, while in September France’s Leroy Merlin announced that is was to spend $2.13bn in doubling the number of its Russian outlet over the same period. Pfizer is also building a new drug factory, while Mars is expanding plants for the production of chewing gum and pet food.
Ikea Russia“This is the moment for investment,” said Walter Kadnar, country head for Ikea,“I strongly believe in the potential of the Russian market long-term.”
“The last 2-3 years have been a disaster,” said Frank Schauff, head of the Association of European Businesses in Moscow. “Now, the situation is changing as the rouble exchange rate has stabilised and the Russian economy is forecast to return to growth soon.” 
US President elect Donald TrumpWhile early signals emanating from the Trump camp suggest that the regime in Washington could spark detente with Russia while erecting trade barriers to stop Chinese goods and services flooding the US domestic market, the Washington Post is reporting that the President elect’s plan to reset U.S.-Russia relations is already encountering stiff resistance from the foreign policy community.
Last week, the Chairman of the Senate Armed Services Committee John McCain called a Trump plan to cooperate in Syria with Putin’s government “unacceptable” and publicly demanded the incoming administration confront Russia for its actions there. “My view has not changed even though Trump won. [The Russians] are a bad actor in the world, they need to be reined in,” said Sen. Lindsey O. Graham, another leading ‘hawk’. “He’s the commander in chief but Congress does have a say and a role in all this.”
US Senator John McCainBefore Trump is sworn in McCain and Graham will lead a congressional delegation to Ukraine, Georgia and Estonia to reassure the USA’s European partners that Washington is still committed to confronting Russian aggression. Starting in January, the pair will hold a series of hearings highlighting Russia’s alleged transgressions around the world, including accusations of war crimes in Syria, cyberattacks, propaganda campaigns and threats to the sovereignty of neighbouring Baltic states.

Source: Bloomberg