A total of $1.5 billion worth of foreign direct investment was made in Iran in 2022, according to the United Nations Conference on Trade and Development’s latest report, up from $1.425 billion in the year before.
The new World Investment Report 2023 has put FDI inflow to Iran from 2017 to 2020 at $5.019 billion, $2.373 billion, $1.508 billion and $1.342 billion respectively.
Meanwhile, Iran saw FDI outflow of $100 million in 2022 up from $82 million in 2021. From 2017 to 2021, the volumes stood at $76 million, $75 million, $85 million and $78 million.
UNCTAD says the volume of FDI inward stock in Iran by the end of 2022 stood at $61.636 billion.
On the other hand, the volume of Iran’s FDI outward stock has been put at $4.239 billion.
FDI stocks are the accumulated value held at the end of the reference period.
The United Nations Conference on Trade and Development is an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade. It was established in 1964 by the United Nations General Assembly and reports to that body and the United Nations Economic and Social Council.
UNCTAD is composed of 195 member states and works with nongovernmental organizations worldwide; its permanent secretariat is in Geneva, Switzerland.
Global FDI Down 12%
According to the report, global foreign direct investment declined by 12% in 2022 to $1.3 trillion.
The decline was mainly a result of lower volumes of financial flows and transactions in developed countries. Real investment trends were more positive, with growth in new investment project announcements in most regions and sectors.
FDI in developing countries increased marginally, although growth was concentrated in a few large emerging economies. Inflows in many smaller developing countries were stagnant and FDI to the least developed countries declined.
Industry trends showed increasing project numbers in infrastructure and industries that face supply chain restructuring pressures, including electronics, automotive and machinery. Three of the five largest investment projects were announced in semiconductors, in response to global chip shortages. Investment in digital economy sectors slowed after the boom in 2020 and 2021.
Investment projects in energy remained stable, allaying, for now, fears of a reversal of the downtrend in fossil fuel investment due to the energy crisis. Oil majors are gradually selling fossil fuel assets to private equity firms and smaller operators with lower disclosure requirements, calling for new deal-making models to ensure responsible asset management.
Russia Overtakes China to Top List of Foreign Investors in Iran
The largest investor of Iran in the last financial year, which ended on March 20, was Russia.
This was stated by Iran’s Minister of Economy and Finance Affairs Ehsan Khandouzi in April.
He said Russia invested $2.76 billion in the country's economy for the year, out of total revenues of $4.18 billion.
“We define our relations with Russia as strategic and we are working together in many aspects, especially economic relations,” the minister told the Financial Times.
He emphasized that China and Russia are Iran’s two main economic partners and that Tehran plans to expand its relations with them by implementing “strategic agreements.”
As Kommersant noted, Russia is implementing three investment projects in Iran worth $2.76 billion. This is a record figure among all market participants. Afghanistan is in second place, implementing 59 projects worth $256 million in the republic, and Iraq is in third place, leading 14 projects worth $223 million.
In addition, $220 million were received from Iranian expatriates for 24 projects and $177 million for 16 projects were invested by the UAE.
The Iranian authorities reported that priority industries of interest to the Russian Federation in Iran, is industry, mining and transportation. Bilateral cooperation with the Russian Federation in Iran is called strategic. China is also named among the important partners in Iran.
Cooperation between the Russian Federation and Iran has especially strengthened after the introduction of Western sanctions against the former, following the Russian military operation on the territory of Ukraine.
