Fitch Ratings has affirmed Russia's long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BBB-' with a negative outlook.
The 'BBB-' ratings balance Russia's strong external and sovereign balance sheets and low sovereign financing needs against structural weaknesses, such as commodity dependence and governance risks, low growth potential and geopolitical tensions, Fitch said.
Fitch expects the Russian economy to contract 1.5% in 2016 and the federal fiscal deficit to widen to 3.9% of GDP. According to the forecast, an average oil price will be $35 a barrel in 2016 and $45 a barrel in 2017.
Moreover, Fitch forecasts that the current account surplus will remain sufficient to cover expected capital outflows of $40 billion in 2016.
The report also showed that Russia’ foreign exchange reserves are stable and capital outflows are contracting due to the reduction of debt.
However, there are risks of falling oil prices and ruble’s depreciation amid continued EU and US sanctions in the medium term, Fitch said.
