S&P and Fitch predicted damage to Russia even without the escalation of the conflict with Ukraine

S&P and Fitch: Russia’s economy could suffer from sanctions even without an invasion of Ukraine

Rating agencies S&P and Fitch assessed the likely consequences of growing tensions between the West and Moscow for the Russian economy (RBC has their forecasts). They believe that the Russian economy could be damaged even if it does not invade Ukraine.

According to Fitch, the agency’s baseline scenario still assumes that a full-scale invasion will not occur. However, the agency notes that tensions around Ukraine have increased the risk of conflict and the imposition of more severe sanctions against Russia. “Sanctions are likely to be in line with any action taken by Russia, which remains highly uncertain,” Fitch said in a filing.

The agency considers local military actions as possible triggers, but also cyberattacks. They considered that in the absence of conflict, “more likely sanctions include a ban on US investors from conducting transactions with sovereign debt on the secondary market, as well as additional sanctions against high-ranking officials, government structures and property of Vladimir Putin supporters.”

These sanctions are unlikely to have an impact on the rating of Russia and the ratings of banks, according to Fitch.