Russia Attracted Record Foreign Investment in 2007

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Russia Attracted Record Foreign Investment in 2007

Russian foreign direct investment doubled last year to $27.8 billion as the nation's economic expansion fueled a consumer boom that weathered turbulence in global markets, Bloomberg reported.

Total foreign investment, including credits and flows into the securities markets, more than doubled to a record $120.9 billion, the Moscow-based Federal Statistics Service said in an e- mailed statement today. Foreign investment in stocks and bonds rose 31.8 percent to $4.2 billion, it said.

The Russian economy, the world's 10th biggest, is expanding for a 10th consecutive year, prompting companies to open new stores and restaurants. The economy expanded 8.1 percent last year, up from a revised 7.4 percent in 2006. Finance Minister Alexei Kudrin said on Feb. 10 that growth this year could reach 7 percent, above his previous estimate of 6.6 percent.

Russians go to the polls on March 2 to elect a successor to President Vladimir Putin who is barred by the constitution from seeking a third consecutive term. Dmitry Medvedev, who Putin backs, is seen as a shoo-in for the post.

The retail industry, including automotive and household good repairs, received the highest amount of total foreign investment, according to the Statistics Service. Foreign investors channeled $47.3 billion into the industry, including stocks and bonds, the statistics office said.

Campbell Soup Co., the world's biggest soup maker, plans to start producing broths in Russia and sell them locally by the end of 2008 to take advantage of booming demand. Russia's food retailing industry will expand on average 17 percent annually through 2010 as rising incomes boost demand for better food, according to UBS AG.

Average wages expanded six-fold since 2000 and retail sales increased at the average pace of 12.2 percent.

Wages increased an annual 15.8 percent in January, reaching 15,059 rubles ($616), the Statistics Service said. Disposable income increased an annual 12.9 percent in January, it said.

Starbucks Corp., the world's largest coffee-shop chain, opened its first cafe in Russia in September. The café opened in a Moscow mall that houses retailers including France's Auchan SA, Stockmann Oyj of Finland, and OBI Bau & Heimwerkermaerkte GmbH & Co. KG, a German home-improvement chain.

Cyprus is the largest foreign investor in Russia after the Netherlands the U.K. and Luxemburg, according to the Statistics Service.

Annual foreign direct investment will rise to between $45 billion and $50 billion in the next three years, Finance Minister Alexei Kudrin said on Nov. 18, according to comments posted on the ministry's Web site.

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