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Investors pulling out of Russia

Catherine Deshayes

Since the conflict began in Georgia, Russia has witnessed foreign investment drop off dramatically, highlighting a reluctance to invest in a region seen as volatile.

Even before Russian tanks rolled into Georgia on August the 8th, foreign investment in Russia was falling.

Since peaking in the middle of May, the Russian stock market has plummeted 36 per cent, with two-thirds of the decline occurring before the war began.

When Russia recognized the independence of the breakaway Georgian regions of Abkhazia and South Ossetia last Tuesday, August the 26th, the Russian Trading System stock index dropped by four per cent, sending the market to its lowest level in almost two years.

Currency and bond markets have also fallen, with Central Bank figures showing that Russia's foreign exchange reserves falling £8.8 billion in the second week of this month from £300 billion in July, the largest drop since the 1998 ruble crisis and financial meltdown

Tensions with the west have also been strained by Russia's objection to the US placing a missile defence in Poland.

Georgia has called on the west to invest in the rebuilding of the region finance ministers from the group of seven richest nations have said they are ready to support Georgia's economic reconstruction in the wake of conflict with Russia.

Georgia needs funding to rebuild crucial infrastructure, such as roads and railway lines, and also to help the people who were displaced due to the fighting in Georgia and South Ossetia.

To browse properties for sale in Russia, visit www.themovechannel.com/property/russia/