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Economic Resilience Helps Russia Dodge Ratings Downgrade

Moody's Investors Service on April 22 said it decided against downgrading Russia's credit rating, citing its economic resilience in recovering from January's plunge in oil prices.

The Wall Street credit agency confirmed Russia's Ba1 bond rating, which remains in junk territory, but it said the outlook is "negative" because of likely further erosion of the government's savings as Russia continues to battle recession.

"The new oil price fall did not add lasting headwinds to the economy...with growth taking only a brief and quite mild additional hit," said Moody's Senior Vice President Kristin Lindow.

"While the ruble initially depreciated by around 15 percent in January when oil prices dropped, it has since strengthened in line with the subsequent recovery in oil prices and declining inflation, leading to limited economic disruption."

"Another sign of the economy's resilience is that inflation continued to fall despite the temporary fall in the exchange rate," she said, noting Russia's inflation rate has fallen to 7.3 percent from 12.9 percent last year.

Because of the economy's bounce back since January, Moody's now expects Russia to emerge from a long recession in the second half of the year.