Russian Knights aerobatic team to perform at Dubai airshowMilitary & Defense July 20, 21:28
Russia looks to its Navy to become world secondMilitary & Defense July 20, 19:10
ExxonMobil disagrees with US Treasury Department’s decision to assess fineBusiness & Economy July 20, 18:45
Putin signs decree on Russia’s navy policy until 2030Russian Politics & Diplomacy July 20, 18:39
Putin personally congratulates human rights champion Alexeyeva on her 90th birthdaySociety & Culture July 20, 18:20
Russian boxer Povetkin reinstated into WBO’s ratings, ranked eighthSport July 20, 18:08
Russia’s Syria campaign spending within current combat training costs — Defense MinistryMilitary & Defense July 20, 17:59
Putin says 80% of Russians friendly to people from different ethnic groupsRussian Politics & Diplomacy July 20, 17:51
Russia to develop cruise missiles capable of striking targets at 1,000km rangeMilitary & Defense July 20, 17:42
ST. PETERSBURG, June 24. /TASS/. Russia is not happy with Brexit as it affects the global economy, Prime Minister Dmitry Medvedev said on Friday.
"A referendum on the United Kingdom’s exit from the European Union has taken place," the prime minister said. "Certainly I would like to note this is a internal affair of the Britons. However, it’s obvious the results of this referendum are important not merely for the UK citizens and the European Union but for the global economy on the whole," he added.
According to the official, it is important to analyze Brexit consequences now and the Russian government will decide on measures for the national economy in this regard.
"It is highly important to analyze consequences [of the referendum in the UK - TASS] and make our internal decisions in the interests of the Russian economy. Certainly, this will be done by the government," he said.
Oil price declined and the pound and the euro rate "are also under pressure," Medvedev said referring to referendum’s consequences for the global economy. "Volatility of commodity and stock markets becomes much higher. We are not happy with that," the prime minister said. Referendum results give rise to extra risks for the Russian and the global economies, he added.
Fitch rating agency reported that the "Leave" result in the UK referendum on membership of the European Union (UN) is credit negative for most sectors in the UK, due to weaker medium-term growth and investment prospects and uncertainty about future trade arrangements.
"Brexit will be moderately credit negative for the UK sovereign and as we have previously stated we will review the sovereign rating shortly," the report said.
"Any negative sovereign rating action would affect the relatively small number of sovereign-linked or capped ratings in infrastructure, public finance and structured finance and government-guaranteed bank debt. But overall we expect near-term rating actions for other sectors to be limited," the agency said.
"In the medium to long term any broader rating actions are likely to depend on factors such as the size and duration of the impact on GDP, the extent of sterling depreciation and their subsequent effect on inflation, asset prices, unemployment and interest rates," Fitch reported.
A potential failure to agree favorable trade arrangements would also be a significant negative for some sectors, the report said. "The UK's status as a major international banking hub could be damaged as some business lines shift to the EU. Higher import costs and pressure on exports due to the potential imposition of tariffs would be broadly negative for corporates. The extent to which the UK would be able to limit net inward migration could be significant for some asset classes," Fitch said.
According to Chairman of the Board of VTB Andrey Kostin, a possible exit of the UK Britain from the European Union may have a negative impact on the European economy.
"They will have to deal with a lot of issues. The EU divorce with the UK, if it finally takes place, will largely pull forces from Europe and, of course, have a negative impact on the process of recovery of the European economy," he said.
"Markets will be nervous now. It seems to me adverse circumstances are in place for the Russian economy on the whole; Russian companies are becoming cheaper, the ruble is under pressure, and oil prices dropped. I believe the negative impact of this factor will be highly limited for Russia in the longer run," Kostin said.
Head of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev considers it possible that the United Kingdom’s exit from the EU will impact London’s international financial center but this won't take place immediately.
"I would say certain time will be required for this exit in any way. It is important to understand this will not take place right tomorrow. A long exit process will take place. Certainly, the financial center will be impacted and the markets have already responded definitely," Dmitriev said.
According to Head of the Centre of Macroeconomic Research at Russia’s top lender Sberbank Julia Tseplyaeva, the British pound sterling will lose 10-15% versus the main currencies due to the UK’s exit from the European Union (EU) and global markets will delve into high volatility while Russia will be among those less affected due to its small dependency on capital flows.
"The pound will drop versus the main currencies by 10-15% and Britain will lose several percentage points of GDP growth over mid-term," she said, adding that the country is not going to have any "economic benefits."
Deputy Chairman of Russia’s VEB development bank Andrey Klepach said Russia’s stock market might rise following the UK’s referendum on leaving the European Union (EU).
"In the long-term I think the turmoil on the European financial market may revive the interest to emerging markets’ securities and to Russia particularly," he said.
According to Klepach, Russian securities have a substantial potential to rise "given the oil price environment and expectations that the Russian economy will be slightly up next year."
The Russian energy minister expects a sharp increase in volatility on the commodity markets in the short term following the UK decision.
"As for the short-term effect, we expect the same reaction as in case with any other event, which potentially has a large scale (the most recent - problems and uncertainty about the Greek debt) - a sharp increase in volatility on financial and commodity markets. This is primarily due to uncertainty and the possibility of a domino effect in the EU. If the EU member states leave the union, it can have significant implications for the economic growth and, consequently, affect the demand for oil. In that case consequences will be really hard to predict, but I would advise to wait before we draw conclusions," Alexander Novak said.
"Briefly about a short-term effect - In the near future investors will prefer to limit their risks, and it means a reduction in activity on emerging markets and the commodity markets. Oil has lost at night up to 5% and, most likely, the volatility will continue. However, we expect a fairly rapid market return to fundamental analysis, and if the situation with the supply and demand is balanced, then the price of oil is likely won’t suffer strongly. If, however, the volumes, that departed due to force majeure (Canada, Nigeria) return to the market, and this complements to uncertainty after Brexit, the fall in prices in the short term can be serious, " the minister added.
The bank official has also said he considers it possible that the new UK government might soften sanction against Russia.
"Brexit won’t influence directly the sanctions, Britain may continue with sanctions," he said.
"As for the change of the government and the power, considering that Prime Minister David Cameron announced his resignation, the new authorities that may come to power after Brexit may be more independent and friendly in their attitude (Towards Russia-TASS) than the current government. It is not ruled out that they may consider softening of sanctions to a certain extent," he said
"Great Britain has always been in the wake of the US foreign policy. It is difficult to count on independence here but some steps towards Russia and softening of sanctions are possible," Klepach said.