Fitch Noted the Stability of the Russian Economy to US Sanctions
OREANDA-NEWS The dependence of the Russian Ruble on oil prices has become weaker. US rating Agency noted that the flexibility of the exchange rate supports ability to reduce the effect of sanctions in Russia.
Despite some instability at first, the Russian economy coped well with the new US sanctions.
Analysts confirmed the country's long-term credit rating in foreign currency at the investment level "BBB-" with a "positive" outlook, short-term - at the level of "F3".
The positive forecast, as explained in the press release, "reflects continued progress in strengthening economic policy based on a more flexible exchange rate, a strong commitment to inflation targeting, and a sustainable budget strategy." All this "contributes to the improvement of macroeconomic stability and, along with reliable external and fiscal balances increases the stability of the economy to shocks."
However, since Fitch last review in February, considerably increased the prospect of additional and more severe sanctions of the USA against Russia.
In future, Russia will support the growth of disinflation, which occurred in the last few years. Thus, in July, the annual inflation in the country, according to experts, reached a historically low level-2.5%. However, by the end of 2018, according to analysts, it will accelerate to the target level of the Central Bank of 4%.
The growth rate of consumer prices in Russia will slow to 4.3% in 2020. The potential risks for the current forecast, as noted in the Fitch report, due to the steady pressure on the depreciation of the Russian Ruble.
"Despite higher oil prices, than expected, the government supports fiscal policies to achieve a balanced primary budget in the medium term, and building up their reserves when oil prices exceed $40 per barrel", reads the statement.
Russia will return to the Federal budget surplus in 2018, it will be 1% of GDP (initially, the budget provided for a deficit of 1.3% of GDP). In 2019, the Federal budget surplus in Russia, as experts believe, will increase to 1.9% of GDP, and in 2020 will fall to 0.9% of GDP.
The growth rate of the Russian economy, according to Fitch experts, will be 1.8% in 2018 and will slow to 1.5% next year. In 2020, the rise will increase to 1.9%.
The decision of the US Agency to maintain a positive outlook on the sovereign rating of Russia has already been welcomed by Russian Finance Minister Anton Siluanov. "In conditions of volatility in emerging markets, accompanied by constant threats to increase the sanctions pressure on Russia, such decision of the Agency is a recognition of the stability of our economy to external shocks and a high assessment of the quality of macroeconomic regulation in Russia", — he said.