The forecast is “negative”. This is stated in the agency reports from Saturday, February 21.
The main reasons for the downgrade to the speculative grade the agency named the ongoing crisis in Ukraine, the outflow of capital from Russia, the fall in oil prices as well as the depreciation of the ruble. The “negative” forecast, as noted by the agency, is based on the fact that in the future Russia can expect “more serious political or economic shocks” related to the Ukrainian conflict or a further decline in oil prices.
“Russia’s economy is expected to experience a deep recession in 2015, and in 2016 the shrinking will continue,” – noted the agency.
On January 26, the agency Standard & Poor’s also downgraded Russia’s credit level credit rating to “junk”. “The flexibility of Russia’s monetary policy is becoming increasingly limited and its potential for economic growth has weakened. We also see an increased risk for the external and fiscal reserves to get depleted due to an increased external pressure and an increased state support of the economy,”- this is how the agency justified its decision.
On January 9, Fitch lowered the long-term credit rating of Russia by one grade to BBB. The agency explained it by a sharp drop of the ruble and oil prices, as well as an increase in the key rate of the Central Bank to 17 percent. Fitch also notes that the Western sanctions have had negative impact on the Russian economy.
Any credit rating below BBB is considered “junk”.