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Total foreign investment into Armenia’s real economy in first half increase by 6% to 81.9 billion drams (about $171.5 million)

YEREVAN, September 11. / ARKA /. Total foreign investments into the  real sector of the Armenian economy (net flows resulting from the difference between the net inflows and outflows of foreign investment)  in the first six months of 2015 amounted to 81.9 billion drams (about $171.5 million), an increase of 6% or 4.7 billion drams compared to the same period last year, according to a study conducted by the  economy ministry titled “Dynamics of Direct Foreign Investments in Armenia, the Region and the World.”

However, net foreign direct investment (FDI) in the first half amounted to 30.7 billion drams (about $64.3 million), a decline of 58% or 42.7 billion drams from the year before, according to the study. The reduction of FDI in the reporting period was due to the sale of its 20% share by the government in ArmRosGazprom (now Gazprom Armenia) national gas distribution company.

“If we consider that the total flow of foreign investments is calculated as the difference between the net inflows and outflows, then, for example, the repayment of previously obtained loans by  the company can lead to a reduction in  total investment,” the study says.

The largest investors in Armenia during the reporting period were as follows: Germany – 11.1 billion drams ($ 23.2 million), Cyprus – 11 billion drams ($22.9 million),  UAE- 9.3 billion drams ($19.6 mln.), Virgin Islands – 8.4 bln drams ($17.7 mln.), Argentina – 7.8 billion drams ($16.3 mln.) and Canada 6 million drams ($12.7 million).

German investments were channeled into production of basic metals; Cyprus investments went to the mining sector, production of metals and wholesale trade; investments from the UAE were used for wholesale trade and manufacturing of electronics; the money from Argentina went to agriculture and air transport and Canadian investments went to to the food sector and production of cigarettes.

During the reporting period, foreign investments were mainly directed to the manufacturing industry – 35.3 billion drams, wholesale and retail trade – 13.1 bln drams, the mining industry – 11.8 billion drams and information and communication sector – 11.5 billion drams.

According to research, made on the basis of the World Bank data, in 2014 net FDI in the balance of payments of Armenia rose 3.4% to $382.8 million, while in 2013 they  declined by  24.26%.

Apart from Armenia the growth of FDI was also showed by Georgia -33.18%; Azerbaijan – by 69.14% and Turkey – by 0.75%.  Russia’s FDI slashed by 69.7%, in Belarus they fell by 18, 41%, Ukraine saw an 81.2% drop and Kazakhstan – a 1.81% fall.

The share of FDI in Armenia’s GDP in 2014 was 3.5%. In Georgia it was 7.7%, in Azerbaijan -5.9%, in Kazakhstan – 4.5%, in Belarus – 2.4%, in Turkey – 1.6%, in Russia – 1.1% and in Ukraine – 0.6%.

“FDI dynamic’s trend in Armenia is consonant with international and regional changes, as Armenia is a small and open country, and thus more sensitive to the effects of the external environment”,  the study says. ($ 1 – 485.61 Drams) -0-

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