International rating agency Moody's has raised its outlook for Russia's sovereign rating from negative to stable, the agency said in a press release.
Analysts also affirmed the rating assigned to Russian government bonds at a speculative grade of Ba1, and the short-term rating at Not Prime.
Moody's thinks that main reasons for the improved outlook include the Russian government's decision to approve a mid-term strategy that will reduce dependence on O&G revenues. The Russian economy has been on a recovery path after nearly a 2-year recession, experts also noted.
The potential of economic growth in Russia remains fairly weak compared to other countries with similar budget revenues. This factor continues to put pressure on the rating. The pace of the recession in 2015-2016 was slower than previously thought, with a 2.8% contraction in 2015 instead of the earlier estimated 3.7%, the agency said in the press release.
If structural reforms that lead to higher poverty, a decrease in economically active population and a spate of investment-depressive factors are not made, analysts at Moody's expect the country's potential growth to remain at 1.5-2%.
In October 2016, Moody's upgraded its outlook for the Russian banking system from negative to stable. Slow economic recovery and stabilization of macroeconomic indicators in Russia will maintain operating environment for Russian banks. For this reason, the agency expects to see higher profit and preservation of capital at Russian banks, Moody's pointed out.
