Russia's Credit Rating Downgraded To Junk

This past Monday, Standard & Poor’s Ratings Services downgraded Russia’s credit rating to BB+, also known as “junk”, for the first time in more than 10 years. This means that it is below investment grade, reflecting the . The Russian economy has been thrown in a downward spiral because of intensifying pressure from sanctions from the and the over the crisis, and the much of its revenue from.

Though the credit rating is a snapshot in time reflecting the current status, it is indicative of a poor future outlook and anticipative of a recession for the Russian economy. With of the government’s revenue coming solely from oil and gas exports, the future looks grim.

This could become a troubling issue globally since is a big contributor to the global market. Specifically, European nations are heavily dependent on Russia’s specialty exports in the energy sector with . Should Russia fall into a recession, Europe’s economy will suffer as a result of their close ties.

Russia’s economic woes have also affected international investors and have prompted . This sell-off is due to some investor limitations on holding sub-investment grade securities.

One factor that could reduce the possibility of a recession would be a big policy change from the government. With Putin’s firm stance on Ukraine, international sanctions will continue to strengthen against Russia and further slow the economy. More open diplomatic dialogue and a looser stance on this particular issue could help ease the pressure on the economy. Also, a turnaround in oil prices could prevent a recession, due to Russia's high level of reliability on this industry.