Oil price hardly matters for Russian country risk

Press release

Amsterdam, November 2, 2016 – The oil price decline has created headwinds for the Russian economy.

However, the risk of doing business in Russia – as determined not only by economic but also by political and structural factors – has not changed substantially and there is therefore no evidence that the oil price decline had a significant impact on Russian country risk.

This is the conclusion reached by Atradius’ study “Oil price hardly matters for Russian country risk”, recently published by Atradius. The recently published study examines the correlation between the oil price and Russia’s score on Euromoney Country Risk (ECR). Country risk grasps the probability that changes in the business environment of a country adversely impact operations or payment for imports, resulting in a financial loss. For the purposes of the study, Atradius has collected and analysed Euromoney data over the period 2011Q1-2016Q1.

As expected, the outcome of the correlation analysis found a significant positive relationship between the oil price and the economic aspects of the country risk measure. However, no such significant relationship was found for the political and structural aspects of the country risk. This means that the oil price decline is only of limited relevance for the Russian country risk, as the stability of the country’s political institutions has mitigated the negative impact of the oil price decline on the economy of Russia. As a consequence, the Russian business environment has remained fairly stable, and the risk of doing business in the country has not been significantly affected.

While the low oil price has impacted the Russian economy its impact on country risk has not been significant and there remain good opportunities for businesses offering the right products and services to export to Russia. Higher insolvencies, and lingering trade sanctions however, amplify the importance of protecting your receivables with credit insurance or other forms of security.

Andreas Tesch, Atradius
Andreas Tesch
Chief Market Officer

About Atradius
Atradius provides trade credit insurance, surety and collections services worldwide through a strategic presence in 50 countries. Atradius has access to credit information on 200 million companies worldwide. Its credit insurance, bonding and collections products help protect companies throughout the world from payment risks associated with selling products and services on trade credit. Atradius forms part of Grupo Catalana Occidente (GCO.MC), one of the leading insurers in Spain and worldwide in credit insurance.

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.