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German investments in Russia highest in decade despite Western sanctions

German investments in Russia highest in decade despite Western sanctions
Investments by German businesses in the Russian economy exceeded €3 billion in 2018, marking the highest level since before the financial crisis more than a decade ago, according to the Russian-German Chamber of Commerce.

“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,” the German trade lobby said in a statement.

The chairman of the chamber Matthias Schepp highlighted that apart from substantial investment in projects such as the Nord Stream 2 natural gas pipeline, Russia’s market offers great opportunities for German small and medium-sized businesses.

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“Companies that are well aware of the Russian market are not in a hurry to be afraid of sanctions and political problems,” Schepp said.

According to the statement, the total volume of financial inflows from German investors in 2018 amounted to €3.2 billion, exceeding the forecasts by the Deutsche Bundesbank that expected the figure to reach a maximum level of €2.1 billion.

The peak of active German investments in Russia was seen from 2006 through the financial crisis of 2008, with the all-time record of €7.8 billion reached in 2007. Back then, the sharp increase in financial inflows was triggered by massive investments into the country’s energy sector thanks to a large-scale €4.6 billion deal clinched by Dusseldorf-based energy company Uniper.

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Earlier this year, the business lobby reported that bilateral trade between the countries in 2018 saw a year-on-year increase of 8.4 percent against the previous year, reaching nearly €62 billion. Trade turnover between Russia and Germany, the country’s second largest trade partner, kept growing despite Western sanctions against Moscow and threats from the US to penalize German companies involved in the Russia-led gas pipeline projects.

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