Credit FAQ: CEE And CIS Countries Turn Away From Russia

The Russia-Ukraine conflict could potentially last longer than S&P Global Ratings first expected, and this is likely to dent confidence further and cause additional rerouting of energy flows. The future development of the conflict is subject to a high degree of uncertainty, but so far has not spread beyond the two countries. Although the Russia-Ukraine conflict has substantially affected the macroeconomic outlook--including growth, inflation, and fiscal balances--across CEE and CIS, the immediate pressure on sovereign credit quality has proved limited. Despite their geographical proximity, CEE/CIS countries often have only limited direct trade and financial linkages with Russia and Ukraine. In particular, for several CEE sovereigns, their most important direct linkages relate to energy imports from Russia, and generally these gas

...- Although the Russia-Ukraine conflict has caused a marked shift to the economic outlook in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) region, sovereign ratings in these areas have so far remained largely resilient. - War is inherently unpredictable, but our baseline expectation is that the conflict will not expand to include any NATO members. - Direct trade and financial linkages between CEE/CIS countries and Russia and Ukraine are often limited. The most important direct linkages that exist are related to energy imports from Russia and financial ties from remittance flows. - Second-round effects, such as the economic slowdown in other trading partners, or rising energy and food prices, will have a similar effect on sovereigns in the region as they do on other sovereigns globally. The Russia-Ukraine conflict could potentially last longer than S&P Global Ratings first expected, and this is likely to dent confidence further and cause additional rerouting...

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