S & P revises Russia’s outlook to ‘negative’

Photo: S & P revises Russia’s outlook to ‘negative’ / Business News

Baku, Azerbaijan, March 21
By Emin Aliyev - Trend:

Standard & Poor's Ratings revised the outlook on Russia's rating from 'stable' to 'negative' due to the growing geopolitical and economic risks, Standard & Poor's Ratings reported on March 21.

The agency affirmed 'BBB/A-2' foreign currency and 'BBB+/A-2' local currency ratings on the Russian Federation.

"The outlook revision reflects the view of the material and unanticipated economic and financial consequences that EU and U.S. sanctions could have on Russia's creditworthiness following Russia's incorporation of Crimea, which the international community currently considers legally to be a part of Ukraine," according to the statement.

The agency also expects that the EU and U.S. will impose further sanctions.

"The deteriorating geopolitical situation has already had a negative impact on Russia's economy," the analysts said. "S&P expects a further modest deceleration in growth this year and have lowered GDP growth forecasts for 2014 and 2015 to 1.2% and 2.2%, respectively, from 2.2% and 3.0% in December 2013. There is a significant downside risk that growth will fall well below 1% if the uncertainties caused by the geopolitical tensions do not
subside in the near term."

"The negative outlook reflects the view that there is at least a one-in-three
chance that the agency could reassess the risks to Russia's creditworthiness based on
its deteriorating external profile and reduced monetary policy flexibility," according to the statement. "As a result, the agency could lower the ratings on Russia within the next 24 months.

Similarly, S&P could equalize the local and foreign currency ratings on Russia
if the analysts were to view Russia's transition toward a more flexible exchange rate
regime as having stalled."

Translated by NH
Edited by SM

Do you have any feedback? Contact our journalist at agency@trend.az

Follow us on Twitter @TRENDNewsAgency