S&P Says Russia Least in Danger

Russia is least susceptible to worsening global growth among 18 European emerging-market nations because of its lower dependence on external financing and "the sheer scale of monetary and fiscal reserves," Standard & Poor's said Wednesday. Russia was also the only country to run a current-account surplus in 2007, S&P said.

Latvia, Estonia and Iceland are most vulnerable to a global slowdown of the 18 countries because of their reliance on capital inflows, the rating agency said in a report titled "Measuring Emerging European Vulnerabilities."

The three countries, which have negative credit outlooks at S&P, are showing the first signs of slowing growth.

A possible recession in the United States may also harm commodity exporters such as Ukraine and Kazakhstan, it said.

The outlook for the U.S. economy may tighten credit flows into emerging Europe, squeezing growth in the countries with the largest external credit needs, such as the Baltic states and Iceland.

"A protracted U.S. slowdown could reverse so-far resilient risk appetite," the report said. "Central banks in those European countries with both high gross external financing needs and considerable reliance upon nonresident participation in government security markets" would need to raise interest rates.

S&P also listed Kazakhstan, Georgia and Hungary as "very susceptible" to a global slowdown.