The ratings reflect Russia's comparatively stable macroeconomic performance driven by exports of natural resources in recent years, the agency said. In addition, they show the government's rapidly improving fiscal position amid the favorable economic performance, a fast improving external balance stemming from the robust exports of natural resources, and the stabilization of the political situation which the Putin administration has attained on the back of the good economic development, JCR said.
While Russia's abundant natural resources are its advantage, an excessive dependence on their exports implies that the economy could be vulnerable to the impact of price fluctuations on the international commodity markets, Japanese analysts said.
In addition, JCR said, as Russia will need to update its aging facilities in order to increase the production of natural resources, it is necessary to watch how the government will deal with new facility investment in the future. Furthermore, Russia needs to diversify and develop industries other than natural resources in order to ensure a sustainable economic growth in the medium to long term.
On the political front, JCR will keep watch on whether political stability will be maintained under the post-Putin administration after the presidential elections to be held in March 2008.
JCR, Japan's largest rating agency, assigns credit ratings to issuers in the Asia-Pacific region.
The agency assigned Russia its first rating.
