Russia: are financial stability risks starting to crystallise?

Risks to Russia’s macroeconomic stability are mounting on the back of the recent credit boom and sharp rise in interest rates. Our EM financial risk indicators show that Russia is now at high risk of a banking crisis. We don’t expect these risks to materialise for now, but with interest rates and debt servicing costs set to rise even further a hard landing scenario – with rising defaults and a sharp tightening in credit conditions – is becoming a bigger tail risk.