MOSCOW, January 18. /TASS/. The Standard & Poor's (S&P) rating agency has affirmed Russia’s "BBB-" credit rating with a stable outlook, S&P said in a report on Saturday.

"We could take a negative rating action in the next 24 months if geopolitical events result in materially tighter international sanctions on Russia," the statement reads. "These could, for example, target large state-owned energy companies, systemically important banks, or the secondary market for Russian sovereign debt. We could also take a negative action if we saw a risk of a material deterioration of Russia's budgetary performance, either due to a looser fiscal framework or contingent liabilities in the banking sector or state-owned enterprises (SOEs)," S&P added.

According to the rating agency, "risks of tighter international sanctions, mostly from the US, remain" but Russia’s "strong policy framework shields the economy, public finance, and the financial system from external shocks."

S&P analysts expect Russia’s new government "to broadly comply with its conservative fiscal rule, even though spending pressures are building up." S&P also "expects the Central Bank of Russia (CBR) to maintain price and financial stability, including during episodes of market volatility."

The rating agency also expects Russia’s new government to maintain macroeconomic policy continuity.

"The proposed constitutional amendments triggered the immediate resignation of the government and, on January 16, the appointment of the new prime minister, Mikhail Mishustin, former head of the federal tax service. Despite these changes, we expect the new government to maintain macroeconomic policy continuity," the document reads.

S&P analysts recognized "Russia's progress in establishing prudent and credible macroeconomic policies." "These remain some of the strongest among emerging market sovereigns and have enabled the economy to absorb a severe terms-of-trade shock in 2014-2015 and withstand episodes of financial market and exchange-rate volatility caused by several rounds of international sanctions," the report pointed out.

"We also acknowledge that the government's recent implementation of parametric pension reform could help mitigate adverse demographic trends in the longer run," S&P experts noted.

Growth of Russia’s GDP

The rating agency also expects Russia’s GDP to grow to 1.8% in 2020.

"We expect growth to rebound to 1.8% in 2020 on the low base effect and policy easing. However, at this point, we don't expect the pace of medium-term economic growth to significantly exceed this level, which remains slower than rated sovereigns with similar income levels," the document reads. "The subdued growth outlook emanates from negative demographic trends (including a shrinking labor force) and only modest productivity gains. Structural impediments to productivity-driven growth include the state's dominant and increasing role in the economy and relatively low levels of competition and innovation," S&P added.

"We estimate full-year 2019 real GDP growth at 1.3%, mainly reflecting a negative fiscal impulse (the combination of the increase in value-added tax and delays to a planned public spending boost) and also weaker global growth," S&P analysts said.