A negative forecast

The international rating agency Standard & Poors downgraded the credit rating of Russia from “stable” to “negative”, referring to the increase in geopolitical risks and economic fall-out due to EU-wide sanctions entailing the aggravation of conflict with Ukraine, The Wall Street Journal reports.

Today, the credit rating of Russia stands at ВВВ level, what means the satisfactory credit solvency of an issuer.  Notwithstanding that not long ago this rating was regarded to be “stable”, yet the likelihood that the level of creditworthiness will fall over the next two years is rather evident.

The reaction of the world community to annexation of Crimea by the Russian Federation can reduce the amount of investments to the country from abroad even more, and have an adverse impact on the economic growth that is already poor. Probably, this will entail cutting down the credit rating.

Standard & Poors reviewed the credit rating of Russia after US President Barack Obama announced a second package of sanctions imposed on the Russian officials and the Bank of Russia.  The US tries to intensify pressure on Moscow in order to force the Russian President to reconsider his decision on Crimea.

But Russia reacts to the international sanctions differently, not as the American and European politicians expected.  In response, on Tuesday, Russia banned nine American lawmakers to entry Russia.

According to the S&P credit ratings, in 2013 the growth of the Russian economy made up only 1,3%. This is the lowest level since 1999, without regard for decline in 2009. It is expected that GDP will further lower in 2014. Furthermore, there is a risk that the economy will go down, lower than 1%, in the event of escalation of the conflict with the European countries.

Apart from S&P, FitchRatings cut the credit rating of Russia, too.