US firms with operations in Russia have been making a lot more investing in the country than what is officially being reported.
According to a joint survey based on data from 160 companies over the past five years, the American Chamber of Commerce in Russia (AmCham) and Ernst & Young found that direct investments into Russia by American companies totalled $96.05 billion. According to the survey’s findings, US businesses invested over $2.2 billion into Russia’s economy in 2020, with plans to invest another $1.8 billion more this year.
A significant portion of the investments were allocated to Russia’s energy and natural resources sector, followed by investments in the country’s goods manufacturing sector. “Despite the decline in activity in 2020 … 84% of companies reported that they are planning to launch new projects in Russia in the near future. This is a record value during the time of our study. For 73.5% of [US] companies surveyed, Russia is a strategic market,” said Ernst & Young partner Sophia Azizian at a subsequent news conference.
The survey also found that 78% of respondents revealed that US sanctions are creating a significantly negative impact on their Russian-based business, compared to 80% in 2020. “The restrictions put American business at a disadvantage compared to companies from other countries and create reputational risk,” the survey acknowledged.
However, probably the most startling in AmCham findings was that “official statistics underestimate the actual level of economic relations between Russia and the US,” because bilateral investment data collected by the survey’s researchers was actually about 9 times higher compared to officially reported numbers.
Information for this briefing was found via AmCam. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
