Moody's has published a forecast for the Russian economy

Moody's has published a forecast for the Russian economy

The international rating agency Moody's has provided an improved outlook for the Russian economy in 2015 and 2016, according to a research note from the agency's Investor's Service.

Previously, Moody's had said Russia's GDP would decline by 5.5 percent in 2015. Now, the agency is saying it expects a decline of just 3 percent in 2015, and that will remain unchanged through 2016, reported.

Moody's noted that while Russia suffered a difficult fourth quarter in 2014, its financial markets have since stabilized. Therefore the country's recession is likely to be less significant and more brief than first anticipated. Moody's analysts said Russia's central bank's decision to reduce interest rates and the slight rise in global oil prices were the main factors behind its decision to adjust its outlook, as these have helped stabilize the ruble and restore growth in some areas of the economy.

  • Also in its report, Moody's said inflation in Russia will hit 12 percent this year, falling to 8.5 percent in 2016.

  • The Bank of Russia initially raised its key interest rate from 10.5 percent to 17 percent in December 2014. This was done to smooth inflation and counter the risk of devaluation after the rapid depreciation of the ruble in that month. With the situation now stablized, the bank has gradually begun lowering the interest rate, which is currently at 12.5 percent.

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