Foreign Direct Investment in Russia Triples in H1 to $55Bln – Putin

But while the president praised foreign interest in the national economy, he skimmed over the issues of capital flight and dwindling macroeconomic growth.

As a positive example of large-scale foreign collaboration, Putin highlighted a deal between the government’s Russian Direct Investment Fund (RDIF) and Abu Dhabi’s state-owned Mubadala Development Company to invest up to $5 billion in Russian infrastructure.

The Russian state will also continue to build up internal resources, including pension money and insurance and banking funds, Putin told the "Russia Calling” forum, hosted by state-owned VTB Capital, Russia’s second-largest bank.

"Special attention will be given to the creation of convenient [financial] instruments and to enhancing trust in the banking and financial sector,” he added.

In terms of gross domestic product, Putin said, Russia is close to becoming "Europe’s first economy and the world’s fifth economy.”

Last year Russia’s GDP was $3.373 trillion, compared with Germany’s $3.378, Putin said, citing the Organization for Economic Cooperation and Development, a global association that helps governments with economic issues.

However, Putin did not mention that Russia’s GDP in the first eight months of this year grew a meager 1.5 percent year-on-year and the seasonally adjusted month-to-month growth was basically zero, according to figures provided days earlier by Economic Development Minister Alexei Ulyukayev.

"There are no visible signs of change for the better,” Ulyukayev said Saturday at an international investment forum in Sochi. He urged Russians to prepare for a worsening unemployment situation due to economic stagnation.

Unemployment is expected to reach 6 percent next year, Ulyukayev said. The current unemployment rate is slightly above 5 percent.

Putin on Wednesday also skimmed over the problem of capital flight. Russia’s Economic Development Ministry recently increased its net capital outflow forecast for this year to $30 billion.

In February, the Central Bank’s then-chief Sergei Ignatyev made headlines when he claimed that a small group of well-connected individuals was responsible for almost half of Russia’s capital flight, which he estimated at $49 billion over the previous year.

Capital flight from Russia peaked at $133.7 billion in 2008, when the global economic crisis broke out, and declined to $56.1 billion in 2009. Capital outflow from Russia stood at $80.5 billion in 2011, up from $34.4 billion in 2010. Capital flight from Russia last year amounted to $56.8 billion.

RIA Novosti