Foreign investments in  Armenian economy dropped significantly in 2024

ArmInfo. The net flow of total foreign investment in the real sector of the Armenian economy  decreased in 2024 to a negative $285.6 million (113.3 billion drams) from a positive $479.3 million (194.3 billion drams), a decrease of 2.6 times year-on-year. This is evidenced by data from the RA Statistical Committee, which defines net flow as the variance between attracted and repaid foreign investments.

The net flow of foreign direct investment (FDI)  ended up in the red,  dropping by  2.2 times over the year - from a positive $624.1 million (253 billion drams) toa  negative $112.9 million (44.8 billion drams). This significant deterioration in the annual dynamics, with the net investment flow turning negative, was caused by negative developments in the Russian Federation and the UAE, which had previously been leaders with positive indicators. The net flow of total investments from Russia, remaining negative for the second year in a row, deepened by 5 times in 2024 - to $156.3 million (62 billion drams). Additionally, in 2024, unlike 2023, the net flow of direct investment from Russia turned negative - $215.1 million (85.2 billion drams), dropping by 4.8 times  annually. The net flow of general investments from the UAE decreased significantly - from the previously  positive $257.6 million (104.3 billion drams) to the current negative $23.5 thousand (9.3 million drams).

The net flow of FDI from the UAE has also dropped from the previously leading positive $248.9 million (100.8 billion drams) to the current negative $23.4 million (9.3 billion drams). Moreover, the UAE has significantly reduced investments related to financial intermediation, where almost the entire volume was previously directed. The Russian Federation has also significantly reduced investments in the mining industry. Meanwhile, in terms of positive net flow of general investments and FDI, the TOP-5 at the end of 2024 include Canada, the offshore island of Jersey, the USA, Switzerland and France. Specifically, the positive net flow of total investments and FDI from Canada amounted to $45.1 million (17.9 billion drams, a decline of 31.1% over the year), and almost the entire volume was directed to the metallurgical industry, with the rest going to the chemical industry.

The total net flow  investments from the offshore island of Jersey amounted to $40.5 million (16.045 billion drams), all of which were FDI. According to statistics, investments from this direction stopped in 2018 and resumed, in fact, six years later. Independent observers believe this may be related to the preparation for the restart of the Amulsar gold project, as well as the potential construction of a number of small metal processing plants.  The total net flow  investments from the United States was $36.5 million (or 14.5 billion drams), showing an annual growth of 15 times (from minus to plus). Of these, over 90% or $33.1 million (13.1 billion drams) were FDI, with an annual growth of 76.6%. Most  American investments, as before, continued to be directed to the IT sector and the production of basic metals. The remaining finds went to cigarette production, housing construction, wholesale trade, repair and installation of machinery and equipment, and research and development. However, American investments in energy projects and the hotel industry have significantly decreased.

The total net flow  investments from Switzerland amounted to $28.7 million (11.4 billion drams), with an annual growth of 2.5 times. Over 97% or $28 million (11.1 billion drams) are FDI, which increased by 2.1 times over the year. Most of the investments from Switzerland are directed towards housing construction, with slightly less going into the IT sector, which previously did not interest Swiss investors. The remaining volume was spent on retail, hotels and energy projects. Additionally, Switzerland has significantly reduced investments in wholesale trade and research, and has completely stopped investing in cigarette production.  The net flow of total investments from France amounted to $28.5 million (11.3 billion drams), with an annual growth of 7.5%. About 65% or $18.5 million (7.3 billion drams) are FDI, which decreased by 23%.  Investments from France are still focused on the water industry, but this time half of the volume went into the IT sector, which was previously not a focus for French investors. At the same time, investments from France in beverage production, energy projects, wholesale trade and the tourism industry decreased, while investments in retail trade were completely zeroed out.

Let us recall that a year ago, based on the results of 2023, the TOP-5 in terms of positive net flow of foreign investment were: the UAE - $257.6 million, Luxembourg - $99.3 million, Canada - $64.2 million, France - $26 million and Switzerland - $11.2 million. At that time, investments from all five leaders increased significantly, in particular from the UAE - 50 times, from Canada - 26 times, from Luxembourg - 10 times, from Switzerland - 4.4 times, and from France - 2 times. The net flow of total investments from Russia shifted from a positive (leading) to a negative level, while Russian FDI, despite a significant decrease, still remained positive. As a result, the Russian Federation's investment position weakened in 2023: the net flow of total investments fell from a positive 158.6 billion in 2022 to a negative 12.6 billion drams ($31.2 million), while FDI also decreased from 109 billion to 30.8 billion drams ($76.3 million). The  investment dynamics from Russia in 2023 worsened as the nthusiasm

that arose in 2022 due to a large-scale influx of relocators to Armenia and their active capital and business movement subsided. The calculated exchange rate of the dram against the US dollar on 12/31/2024 was AMD396.56  / $ 1, against AMD 404.79 / $ 1 on 12/31/2023).