The international rating agency Fitch has downgraded Russia’s long-term rating from BBB to BBB-, the lowest possible investment grade, and added a negative outlook to the rating.
A press release from the agency was distributed the day before. The short-term foreign currency IDR has been affirmed at F3, and the country's ceiling has been lowered to BBB- from BBB. Fitch experts associated the decline of Russia's position with the rapid deterioration of the economic outlook compared to the middle of last year, which is caused by sharp falls in the oil price, the depreciation of the national currency and an increase in interest rates.
"Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks' and corporations' access to external capital markets," TASS cited Fitch's press release. According to the ratings agency, in 2015 Russia's GDP will decrease by 4% compared with our previous forecast of minus 1.5%. Inflation next year is projected at 8.5%. It is expected that the economy will return to growth no earlier than 2017. "Russia's international reserves have shrunk faster than Fitch expected, and now are continuing to shrink.
The accelerated transition to a floating exchange rate haltex the decline in reserves, but at the end of 2014 they were already less than $390 billion, which is more than $120 billion less than at the end of 2013, and worse than our previous forecasts," Fitch said. "The depreciation of the ruble, the volatility of the stock market and the sharp rise in interest rates from 10% to 17% have dealt a serious blow to the banking sector," reported Fitch.
But the leaders of Russia, Fitch experts say, have taken all the necessary measures to strengthen the domestic economy. The agency Standard & Poor's has left Russia's sovereign rating at 'BBB-' with a negative outlook. The country's rating by Moody's of 'Baa2' was also with a negative outlook. The Russian authorities have reacted to this rating with disbelief: an expert from the government regarded the rating as "politically engaged and economically totally unmotivated," Tass reports.
