27 Jan 2015
Russia 2015 GDP may fall to -7.9% yoy – Danske
FXStreet (Barcelona) - The Danske Bank Research Team notes that S&P cut Russia’s long and short-term FX debt ratings to junk as growth prospects deteriorate, and further cuts Russia’s 2015 GDP forecast to -7.9%yoy.
Key Quotes
“Yesterday the rating agency Standard & Poor’s (S&P) cut Russia’s long- and shortterm FX debt ratings to junk level (BB+ and B from BBB and A-3 accordingly) preserving a negative outlook, as the country’s economic growth prospects have deteriorated and ‘monetary policy flexibility has weakened’. At the same time the country’s local currency debt ratings were cut to BBB- and A-3 from BBB/A-2.”
“According to S&P Russia’s central bank’s aggressive monetary policy is weighing on economic growth allowing it to expand 0.5% annually in 2015-2018. The slumping oil price is causing a severe terms-of-trade shock.”
“Capital outflows reached almost USD152bn in 2014 and we estimate that Russia’s corporate debt outstanding in 2015 is approximately USD160bn.”
“[..] we cut our 2015 GDP forecast to -7.9% y/y from -1.8% y/y on 19 December 2014. Demand- and supply-side shocks will further curb fixed investments and have a significant impact on business sentiment and productivity growth hitting loan growth and private consumption.”
“The RUB saw significant pressure falling 4.6% against the USD after the statement was released. We expect the fall in the RUB, Russian stocks and sovereign bonds to continue this week.”
Key Quotes
“Yesterday the rating agency Standard & Poor’s (S&P) cut Russia’s long- and shortterm FX debt ratings to junk level (BB+ and B from BBB and A-3 accordingly) preserving a negative outlook, as the country’s economic growth prospects have deteriorated and ‘monetary policy flexibility has weakened’. At the same time the country’s local currency debt ratings were cut to BBB- and A-3 from BBB/A-2.”
“According to S&P Russia’s central bank’s aggressive monetary policy is weighing on economic growth allowing it to expand 0.5% annually in 2015-2018. The slumping oil price is causing a severe terms-of-trade shock.”
“Capital outflows reached almost USD152bn in 2014 and we estimate that Russia’s corporate debt outstanding in 2015 is approximately USD160bn.”
“[..] we cut our 2015 GDP forecast to -7.9% y/y from -1.8% y/y on 19 December 2014. Demand- and supply-side shocks will further curb fixed investments and have a significant impact on business sentiment and productivity growth hitting loan growth and private consumption.”
“The RUB saw significant pressure falling 4.6% against the USD after the statement was released. We expect the fall in the RUB, Russian stocks and sovereign bonds to continue this week.”