Monday, January 17 2022 14:26
Karine Melikyan

The influx of foreign investment in the Armenian economy grew by  October 2021 due to a jump in FDI

The influx of foreign investment in the Armenian economy grew by  October 2021 due to a jump in FDI

ArmInfo. The volume of total foreign investment in the real sector of the Armenian economy in January-September 2021, compared to the same period in 2020, grew by  33% (from a 32% decline a year earlier), exceeding the 27.1% growth  in the pre-Covid similar period of 2019, reaching in 9 months of 2021  $1.954 billion.

The share of FDI in total foreign investment in  January- September 2021 accounted for 28% (against 25% a year earlier  and 21% two years ago) or $549 million, which is higher than the same  period in 2020 by 50.2% (against 20% decline in 2020 and 17.4% growth  in 2019). This is evidenced by the data of the RA Statistical  Committee.

It should be noted that the RA Statistical Committee publishes data  on foreign investments once a quarter, indicating them in drams and  in the form of gross flow - accumulated volume (without repayments)  from 1988 to the reporting date, in this case, to September 30, 2021.  To prepare this material, ArmInfo specialists independently  calculated the annual volumes, taking as a basis the statistical data  of the gross flow in the corresponding periods under review  2019-2021. Such statistics do not give real figures on investment  income for a specific period of time, however, they show the general  dynamics and trend. The Statistical Committee publishes data on the  net inflow of investments six months after the reporting date.

According to statistical data, in terms of countries, only the third  in the TOP-3 in terms of total foreign investment has changed. So,  the championship in January-September 2021 is held by Russia, and  both in terms of total investment - $ 975.1 million (with an annual  growth of 86.1%, against 31% decline in 2020 and 29.1% growth in  2019), and in terms of FDI - $ 371.1 million (with an annual growth  of 41%, against a 7% decline in 2020 and a 21.4% growth in 2019) .  The second position in terms of total investment is occupied by  Germany - $501.2 million (with an annual growth of 1.2%, after a  slowdown in growth in 2019-2020 from 8.5% to 5.6%), of which $92.8  million is FDI (with an annual jump by 4.4-fold, after slowing down  the decline in 2019-2020 from 29% to 25.7%). And this time the top  three is closed by the Netherlands, from where the total volume of  investments increased by 33.1% year-on-year - up to $27.5 million,  with a noticeable increase in FDI - 4.4-fold to $11.5 million.  However, in terms of FDI, Cyprus is ahead of the Netherlands with the  volume at $33.5 million (with an acceleration of annual growth from  1.1% to 19.4%), despite the negative value of the total investment  (-$48.9 million, with a reversal of annual dynamics from 72.4% growth  to a decline of 2.5-fold), which repeats the trend of the pre-Covid  period of the same period in 2019 (an increase in FDI by 44% with a  decline in total investment by 12%), but until 2021 the value of  total investment was positive.

In the volume of total foreign investment, the share of Russia for 9  months of 2021 accounted for 49.9%, Germany - 25.7%, the Netherlands  - 1.4% and Cyprus - minus 2.5%, and in the volume of total FDI, the  share of these countries is respectively 67.6%, 16.9%, 2.1% and 6.1%.  A year earlier, for 9 months of 2020, in the volume of total foreign  investment, Russia accounted for 35.6%, Germany - 33.6%, Cyprus -  6.9%, the Netherlands - 1.4%, and in the volume of total FDI the  share of these countries was 72%, 5.7%, 7.7% and 0.7%, respectively.  Two years earlier, for 9 months of 2019, in the volume of total  foreign investment, Russia accounted for 35.1%, Germany - 21.7%,  Cyprus - 2.7%, and in the volume of total FDI, the share of these  countries was respectively 62.8% , 6.2% and 6.2%.

It is noteworthy that in the mining industry, where the lion's share  of investments comes from Jersey, after a two-year absence of  injections (since April 2018), an influx of 3.2 billion drams ($6.6  million) "appeared" in the Q2 of 2020, which increased the total  volume of investments (and this completely FDI) from Jersey to 141.9  billion drams ($290.5 million - gross flow for 1988-2020), but since  the Q3 of 2020, infusions again stopped, which reduced the volume of  total investments, as well as FDI, by October 1, 2021 by more than  8-fold. The previous inflow of investments from Jersey took place in  the first quarter of 2018 in the amount of about $43 million, and  after that there were no receipts for 2 years, which, in all  likelihood, was due to the actual suspension of the Amulsar program  (due to the so-called "new environmental factors" - ed.note).

To recall, in 2020, the volume of total foreign investment in the  real sector of the Armenian economy decreased by 39%, amounting to  $1.8 billion, while a year earlier, an increase of 19% was recorded.  In their structure, the volume of FDI decreased over 2020 by 21%,  amounting to $466 million, against a meager decline of 2% in 2019.  The share of FDI in total foreign investment, after declining from  35.2% to 20% in 2016-2019, increased to 26% in 2020. To note for  comparison, that in the pre-Covid 2019, the volume of total foreign  investment (all types and forms of investment - ed. note) in the real  sector of the Armenian economy accelerated annual growth from 7.9% to  17.7%, in the structure of which the volume of FDI slowed down the  decline from 11.2% to 2.5%. (The settlement rate of the dram as of  September 30, 2021 was 484.20 AMD/$1, and as of December 31, 2020 -  522.59 AMD/$1).


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