«We expect economic growth in CIS to remain stable, averaging 3.9 percent for the region in 2019,» a report of Moody’s Investors Service says.

It is noted that a stable forecast of sovereign creditworthiness for CIS persists. It balances expectations for sustained economic growth and risks associated with tightening global liquidity and political risks. The risks include the tightening of sanctions against Russia, which may affect regional trade and the volume of remittances.

«Strong dependence on external financing will expose the region to toughening global liquidity, while political tensions will remain the main source of risk for economic stability and reform. Moody’s does not expect economic reforms in the CIS to accelerate in 2019, as still weak institutional frameworks will constrain the policy effectiveness. Hard spending commitments will also keep the burden of public debt at a high level for some CIS countries, limiting their financial strength,» the agency’s experts say.

Nevertheless, a more dramatic increase in financing costs than Moody’s expects now will affect the region’s credit quality. Countries with a high level of dollarization may face further deterioration in banking sector risks.

«Geopolitical and domestic risks will remain noticeable in 2019. In addition to the possibility of tougher U.S. sanctions against Russia, the risks are associated with tensions between Russia and Ukraine and domestic political instability prior to the upcoming elections in Ukraine and Moldova,» Moody’s says.

Moody’s Investors Service includes Russia, the Republic of Belarus, Kazakhstan, Azerbaijan, Armenia, the Republic of Moldova, Tajikistan, Kyrgyzstan, Uzbekistan, and Ukraine in the number of CIS countries.