Foreign investments flow from offshore Jersey to Armenia resumed

ArmInfo. The net flow of total foreign investments in the real sector of the Armenian economy decreased in January-September 2024 to a negative $119.5 million (46.3 billion AMD) from a positive $353.7 million (139.2 billion  AMD), a 2.3 times year-on-year. This is evidenced by data from the RA  Statistics Committee, which defines net flow as the difference  between attracted and repaid foreign investments. Despite this  overall decrease, the net flow of foreign direct investment (FDI)  remained positive, although it did decrease by 9 times year-on-year -  from $436 million (171.5 billion AMD) to $48.5 million (18.8 billion  AMD).

In terms of country investment structure, Russia leads in  net flow  of investments  flow of total investments and FDI with $52.4 million  or 20.3 billion AMD. This marks a fourfold increase from the previous  year, transitioning from negative to positive levels. Of this amount,   $45.8 million or 17.7 billion AMD are attributed to FDI, showing a  22% decrease annually. The majority of these allocations are  allocated towards the development of metal ore deposits.  In 2nd  place, the offshore island of Jersey experienced a positive net flow  of total investments totaling $41.4 million (or 16.045 billion AMD)  in FDI. According to statistics, investments in this area had ceased  in 2018 but resumed six years later.  Independent observers suggest  that this may be related to preparations for the restart of the  Amulsar gold mining project, as well as  the potential construction  of several small metal processing plants.

In 3rd place is the United States with a positive net flow of total  investments of $ 29.9 million (or 11.6 billion AMD), showing an  annual growth of 4.2 times. Of these, 72% or $ 21.5 million (8.33  billion drams) are FDI, with an annual growth of 26.7%. Most American  investments continue to be directed to the IT sector and the  production of basic metals, with the remainder going into cigarette  production, housing construction, wholesale trade, and repair and  installation of machinery and equipment. However, American  investments in energy projects, the hotel business, and research and  development activities have decreased significantly. Switzerland is  in 4th place in terms of positive net flow of total investments, with  $26.4 million (10.2 billion AMD), showing an annual growth of 2.3  times. Over 81% or $21.5 million (8.3 billion AMD) of these  investments are FDI, which has doubled in a year. Most of the  investments from Switzerland are directed towards housing  construction. 

Slightly less money went to the IT sector, which had not previously  interested Swiss investors. The rest was invested in retail trade,  the hotel business, and energy projects. Additionally, Switzerland  has significantly reduced investments in wholesale trade and  scientific research, and completely eliminated investments in  cigarette production. Canada ranks 5th in terms of positive net flow  of total investments, with $24.5 million (9.5 billion AMD). This is  entirely FDI, which has decreased by almost half compared to the  previous year. Most of the investment from Canada is directed to the  metallurgical industry, with the remainder going to the chemical  industry.

Recall that a year ago, according to the results from January to  September 2023, the TOP-5 countries in terms of net foreign  investment flow were: UAE - $267.5 million, Luxembourg - $66.2  million, Canada - $43.5 million, France - $11.5 million and  Switzerland - $11.1 million. During that period, investments from  almost all of the top countries had grown significantly.  Specifically, investments from the UAE - 53 times, from Canada - 40  times, from Switzerland - 5 times, from Luxembourg - 3 times, and  from France had actually decreased by 26%.  As for the net flow of  total investment from Russia, in 2023 the volume dropped from a  positive level to a negative one. However, Russian FDI, despite a  significant decrease, still remained at a positive level.  Overall,  the Russian Federation's position in terms of investment weakened in  2023: the net flow of total investment fell from a positive 158.6  billion in 2022 to a negative 68.6 billion AMD ($169.5 million),  including FDI, which dropped  from a positive 109 billion to a  negative 25.1 billion AMD ($62.1 million).  The decline in  investments from Russia can be attributed to decrease in the activity  from relocators in 2022, who were moving their capital and business  to Armenia. As a result, the TOP-5 in terms of investment in 2023  were led by the UAE, which increased its volume by 50 times - to  $257.6 million, followed by Luxembourg, Canada, France and  Switzerland, which also significantly increased the volume of  investments. (The  exchange rate of the dram against the US dollar on  30.09.2024 was AMD 387.29 /$1, against AMD 393.40 /$1 on 30.09.2023  and AMD 404.79/$1 on 31.12.2023).