Negative outlook: Fitch cuts Russia credit rating

WASHINGTON: Fitch Ratings cut Russia’s credit grade to just one notch above junk level, saying plunging oil prices and Western sanctions will force a 4% economic contraction this year. Fitch lowered its rating for Russian government debt by one step to BBB-, the lowest possible investment grade, and added a negative outlook on the rating. “The economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the ruble, coupled with a steep rise in interest rates,” Fitch said. “Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks’ and corporates’ access to external capital markets.” The agency said that had forced it to cut its forecast for the Russian economy this year to a 4% contraction, compared with its previous forecast of a 1.5% contraction and growth of 0.6% in 2014. “Growth may not return until 2017,” the agency warned.

Published in The Express Tribune, January 11^th, 2015.

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