Forecast downgrade in Russia despite brisk economic performance
On the back of prolonged global economic turmoil, we downgraded our GDP growth forecast for Russia, but still expect above 4% growth in 2011-13. Russian growth has clearly picked up during recent months, and we expect GDP growth to be close to 5% in H2 11E vs 3.7% in H1. Growth is underpinned by domestic demand.
However, Russia has to be prepared for clearly worse performance as well. We expect the Brent oil price to remain above USD110/bbl also in 2012, supported by demand from China and the US. However, a severe drop in the oil price, or a renewed credit crunch could lead to markedly lower growth in Russia than we expect in our base scenario.
Kazakhstan credit ratings upgraded by Fitch
Kazakhstan received a sovereign rating upgrade from Fitch to BBB from BBB- (long-term foreign currency rating) after an upgrade from S&P earlier in November. Upgrades reflect the strong external position and disciplined fiscal policy of the country. Moreover, the banking sector in Kazakhstan basically collapsed during the 2008-09 global crisis, but rather than bailing out banks, the sector was reconstructed and the country has recovered swiftly. However, dependence on the oil price and the unsolved political succession of president Nazarbayev remain the key uncertainties. Fitch keeps the ratings outlook ‘positive’ for Kazakhstan, which means that another upgrade could come as early as next year.
On the back of prolonged global economic turmoil, we downgraded our GDP growth forecast for Russia, but still expect above 4% growth in 2011-13. Russian growth has clearly picked up during recent months, and we expect GDP growth to be close to 5% in H2 11E vs 3.7% in H1. Growth is underpinned by domestic demand.
However, Russia has to be prepared for clearly worse performance as well. We expect the Brent oil price to remain above USD110/bbl also in 2012, supported by demand from China and the US. However, a severe drop in the oil price, or a renewed credit crunch could lead to markedly lower growth in Russia than we expect in our base scenario.
Kazakhstan credit ratings upgraded by Fitch
Kazakhstan received a sovereign rating upgrade from Fitch to BBB from BBB- (long-term foreign currency rating) after an upgrade from S&P earlier in November. Upgrades reflect the strong external position and disciplined fiscal policy of the country. Moreover, the banking sector in Kazakhstan basically collapsed during the 2008-09 global crisis, but rather than bailing out banks, the sector was reconstructed and the country has recovered swiftly. However, dependence on the oil price and the unsolved political succession of president Nazarbayev remain the key uncertainties. Fitch keeps the ratings outlook ‘positive’ for Kazakhstan, which means that another upgrade could come as early as next year.