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Moody's: Moscow and St. Pete show greatest stability against economic downturn in Russia

June 24, 2015, 17:59 UTC+3 LONDON
Both cities are vulnerable to the growing economic pressure, experts say
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LONDON, 24 June. /TASS/. Moscow and St. Petersburg show the greatest stability against the economic downturn in Russia, according to a review of the international rating agency Moody's Investors Service, published Wednesday.

According to the agency’s experts, strong budgetary and economic performance of the two cities, as well as the low debt level and string liquidity position mean that Moscow and St. Petersburg are well-prepared to cope with the crisis period.

"Both cities are vulnerable to the growing economic pressure. However, we believe that the fundamental economic indicators of this two cities partially compensate for the impact from the weakening of the ruble," according to the Vice President and Senior Analyst at Moody's Vladlen Kuznetsov.

As TASS reported earlier, in May Moody's Investors Service international rating agency improved the outlook for the Russian GDP in 2015-2016.

Agency’s experts expect now the Russian GDP will contract by 3% in 2015 vs. 5.5% decline of the GDP under the previous outlook. Moody’s forecasts zero growth of the Russia’s GDP in 2016 as compared to the 3% decline according to the previous research.

The Russian financial market stabilized since the end of January 2015 after the complicated fourth quarter of 2014, Moody’s said. According to the current outlook by Moody's, the recession in Russia may turn to be less significant and lengthy than expected earlier, agency’s experts said.

Action of the Bank of Russia on the key rate lowering contributed to the recovery of the economic situation in Russia along with the recovery at the global oil market, Moody's said. The average Brent oil price will be at the level of $55 a barrel in 2015 and at $65 a barrel in 2016, the rating agency reported.

Moody's experts expect the Central Bank of Russia will continue lowering the key rate at 2-3 next meetings and will address higher priority of the economic growth and the recent ruble recovery. Nevertheless, the monetary policy relaxation effect will most likely manifest during two and more quarters, considering the loan rates do not decline as quickly as the key rate, Moody's said.

According to the outlook of Moody's Investors Service, inflation in Russia will total 12% year-on-year in December 2015 and will slow down to 8.5% in 2016.

In February, 2015 after S&P Moody’s downgraded Russia’s sovereign rating to the speculative grade. The international rating agency Fitch maintains Russia’s rating at BBB-investment grade.

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