Bloomberg News

Russian Economy to Slow on Lending Curbs, Outflows, S&P Says

February 17, 2012

(Updates with S&P comments starting in second paragraph.)

Feb. 16 (Bloomberg) -- Russia’s economy will remain “dynamic” in the first half before losing steam in the final six months because the central bank will try to curb lending, Standard & Poor’s said.

Bank Rossii will probably try to slow credit growth in the second half to reduce inflation risks from an increase in electricity and gas prices that was pushed to July 1, the credit-rating company said in a report today. Limited access to bank loans and higher borrowing costs may curtail corporate investment from mid-year, according to the report.

“Following 4.2 percent growth in 2011, we think the slowdown will lead to GDP growth of about 3.5 percent for the full year,” Jean-Michel Six, chief economist for Europe at S&P, said in the report.

The world’s largest energy exporter last year returned to output levels achieved before a 7.8 percent contraction in 2009 as the global financial crisis shackled credit flows and hurt demand for commodities. Prime Minister Vladimir Putin, who is seeking to return as president in a March 4 election, has said Russia must grow by at least 6 percent annually to become one of the world’s five largest economies in terms of purchasing power.

The Micex Index of 30 stocks retreated 1.1 percent to 1,562.44 at 12:26 p.m. in Moscow. The ruble weakened for a third day against the dollar, dropping 1 percent to 30.295 against the U.S. currency.

Military, Pensions

Consumer demand, supported by increases in military salaries and pensions this year, will help support the economy in the first half, S&P said. Net capital outflows of $84 billion last year, the second-highest on record, will probably continue to weigh on growth, according to the report.

“It is difficult in our opinion to see what would slow this rise in capital outflows in 2012,” Six said. “Political uncertainties at home won’t necessarily disappear immediately after the presidential elections. There will still be many questions relative to the pace at which the new government will be ready to undertake structural reforms.”

--Editors: Paul Abelsky, Balazs Penz

To contact the reporter on this story: Scott Rose in Moscow at

To contact the editor responsible for this story: Balazs Penz at

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