Moody’s sees Russian economy rising 1.5% in 2017

MOSCOW, Sep 12 (PRIME) -- International rating agency Moody’s expects the Russian economy to rise 1.5% in 2017 after a 1% fall in 2016, the agency said in a statement Monday.

In July, the agency expected Russia’s gross domestic product (GDP) to fall 1.5% in 2016 and to rise 0.5–1.5% in 2017.

Moody’s also expects the asset quality of Russian banks to improve in 2017 “as the country pulls out of recession.”

“The deterioration of asset quality in the Russian banking system reached its nadir this year…We believe that Russian banks have detected most challenges in their corporate lending portfolios and we therefore do not expect a resurgence of new problem loans absent a material external shock,” the agency quoted its Assistant Vice President Petr Paklin as saying.

The figures of Russia’s central bank “indicate that the formation of new corporate non-performing loans declined in January–June 2016 to below pre-crisis levels, not seen since early 2014.” Still, Moody's expects credit costs to remain high in 2016–17 owing to under-provisioning of problem lending, the agency said.

In early September, Economic Development Minister Alexei Ulyukayev said the ministry worsened its baseline forecast for contraction of Russia’s GDP in 2016 to 0.5–0.6% from a previously expected 0.2% fall. The ministry also expects the country’s economy to grow 0.7–0.8% in 2017 under the average annual oil price of U.S. $40 per barrel.

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