Russia continues to be one of the most preferred locations for investments for businesses from Germany, in spite of the constant tension of Russia with the United States, and the spate of sanctions from the US and the European Union.
The foreign direct investment by German into Russia in the first quarter of 2019, has witnessed a massive increase of 33 per cent as compared to the same period in the previous year, thereby reaching an approximate value of 1.7 billion euros as per a recent statement from the representatives of the Russian-German Chamber of Commerce.
Mathias Schepp, the chairman of the statement emphasized on the growth of German business in Russia by stating: “Despite weak market conditions, German companies continue to believe in the Russian market. Companies that are well aware of the Russian market are not in a hurry to be afraid of sanctions and political problems.”
Similarly, the German trade lobby had also released a statement in April saying: “Despite Western sanctions along with Russia’s retaliatory measures the volume of investments by German corporations into the Russian economy last hit a record high in 2008.”
In the period of 2014 to 2018, the Russian economy had largely reached a standstill owing to numerous international sanctions that had been imposed on the country during the crisis of Ukraine in 2014. However, throughout the period, Germany had remained a stable business partner for Russia. As Europe’s biggest economy, Germany has approximately 4,500 businesses registered in Russia, nearly 10 times more than other member states of the European Union.
Weakened Ruble Increases German Interest
Most of Germany’s interest in Russia arises from the massive Russian reserves for natural gas and oil. Germany has already invested heavily in the Nord Stream 2 pipeline for natural gas, which is anticipated to double the exports of natural gas from Russia to Germany.
In addition, Russia is offering a number of opportunities for small and medium scale German enterprises. Further, interest from German businesses has risen since the Russian Ruble fell in value in 2014, as three fourths of the Russian FDI stocks come from EU member states.