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. Last Updated: 07/27/2016

Fitch Says Economy Can Withstand Jitters

The country's economy is in good shape to survive global market jitters due to high oil prices and strong investment, Fitch Ratings agency said Thursday, confirming its BBB+ investment grade.

"The pick-up in investment growth to around 20 percent this year increases confidence in Russia's medium-term growth prospects, while high oil prices are continuing to enhance its financial position and capacity to absorb shocks," said Edward Parker, head of Emerging Europe Sovereigns at Fitch.

Russia has so far escaped the worst impact of global turbulence, although the benchmark RTS index has lost about 10 percent in the last three weeks and Gazprom has had difficulties placing a 30-year bond.

The Fitch statement is likely to provide support for the falling stock market, where the banking sector has been worst hit despite rising profits. The Russian market has underperformed other emerging markets this year. "In my view, at some point if not already now, depending on how long the subprime situation drags on, Russia is a great buying opportunity," a senior banker with a major Western bank in Moscow said.

"Russian fundamentals have not changed, and even strengthened this year," the banker added, pointing to strong economic growth fueled by investment.

Fitch said it forecast 7.7 percent economic growth in 2007, above the government's estimate of 7.1 percent. Its data showed industrial output rising by 7.8 percent year on year in July.

Gold and foreign exchange reserves, the world's third-largest, surged to $420 billion last week, putting the country in a good position to withstand any speculative attack on the ruble, which strengthened by 0.6 percent against the dollar and euro basket last week.