In mid-May, the Central Bank of Russia published statistics on foreign direct investment (FDI) from the Russian Federation abroad for 2020. The drop in the indicator was 76%, i.e. $ 5.3 billion. In terms of country, the dynamics of investments was heterogeneous, and a noticeable part of the decline may be explained by the prospects for changes in tax agreements with transit jurisdictions.
In 2020, the net outflow of direct investments of investors from the Russian Federation from Cyprus amounted to $ 1.5 billion (thanks to debt instruments, reinvestment of income and investment in capital remained positive) against an inflow of $ 14.3 billion in 2019. $ 6.5 billion was withdrawn from the Netherlands (due to debt and reinvestment, investments in capital added more than $ 1 billion) against an outflow of $ 0.2 billion in 2019. The change in the double taxation treaty (DTT) with Cyprus from 2021 and the prospect of breaking it with the Netherlands from 2022 probably triggered an increase in investments in Switzerland, Jersey and Ireland compared to 2019. At the same time, FDI from Russia to Singapore and Hong Kong decreased.
As for global direct investment flows, by the end of 2020 they fell by 38% - to $ 846 billion, which is the lowest figure in 15 years. This was reported by the Organization for Economic Cooperation and Development (OECD).
China overtook the United States to become the main recipient of FDI ($ 212 billion and $ 177 billion, respectively), followed by India ($ 64 billion) and Luxembourg ($ 62 billion). The main sources of FDI were Luxembourg, the United States and Japan.
The rebound in cross-border mergers and acquisitions (M&A) activity, which began in the second half of 2020 and continued in January-March of this year in advanced economies, could boost direct investment in 2021.
