...The Russian government has substantial flexibility to support both banks and corporates with its formidable balance sheet. We believe there remains a strong propensity to support national champions despite official sources suggesting that support will be more selective than in the 2008 crisis. Nevertheless, the move by the US, coupled with the European Council's announcement that it will expand restrictive measures, is an indication of the willingness to tighten sanctions and may increase downside risk to growth. We recently lowered our growth forecasts for Russia to 0.5% in 2014 and 1.5% in 2015, mainly due to the impact of US and EU sanctions and rouble depreciation. Falling investment had already seen Russia's real GDP growth rate slow in 2013, although consumption had supported growth ¡ a pattern repeated in 1H14. Geopolitical tensions are likely to keep relations between Russia and western countries under strain in 2014-2015, making further tightening of sanctions more likely than...
