Country risk

Country risk in Russia is moderate. The OECD country credit grade is 4. Russia’s sovereign credit ratings have risen into investment grade territory in recent years, supported by economic liberalisation policies and preservation of large fiscal and external buffers. Overall, this indicates a moderate likelihood that Russia will be unable and/or unwilling to meet its external debt obligations.

Russia’s business climate ranked 28th out of 190 economies on the World Bank’s ease of doing business scorecard. Russia outperforms emerging European neighbours on several indicators, including starting a business, dealing with construction permits, registering property and getting electricity and credit. However, protecting investors and trading across borders are somewhat more difficult in Russia compared to regional peers. The state continues to play a large role in the economy.

The risk of expropriation is moderate to high. For example, the Russian authorities seized assets of the Yukos Oil Company in 2003, which at the time produced 20% of Russia’s oil output.

Political risk, both domestic and geopolitical risk, remains a key concern for investors. Additional international sanctions from some countries could further hinder business confidence and investment.