Fitch Ratings affirmed Russia’s credit rating at ‘BBB’ with a stable outlook, the global rating agency said Friday.

The rating reflects Russia’s credible macroeconomic policy framework, strong external balance sheet and low level of general government debt to gross domestic product (GDP), it said.

Those, however, are balanced against geopolitical risks, weak governance, low potential GDP growth and the country’s high dependence on commodity prices.

“The stable outlook reflects the effectiveness of policy in preserving the strength of the sovereign balance sheets and helping anchor macroeconomic stability in the face of the Covid-19 shock and high oil price volatility,” it said.

Sanction risks, on the other hand, remain high for Russia, Fitch said, and US sanctions on the banking or energy sectors could have an effect on credit fundamentals, and that relationship continues to be uncertain and subject to downside risk.

Fitch said it forecasts Russia’s GDP to grow 3.7% in 2021 with gradually increasing oil production in line with OPEC+ quotas.

Inflation accelerated to 6.5% in June in Russia, the agency said, noting that it estimates it will come down to 5.5% by the end of the year and close to 4.2% at the end of 2022.

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