A major credit rating service has cut its outlook for Russia's economy, saying Moscow's conflict with the West over the annexation of Crimea threatens to weaken Russia's already deteriorating performance.
Standard & Poor's said Thursday it is not cutting Russia's credit rating but revising its outlook from stable to negative. S&P said "heightened geopolitical risk" over Crimea and the prospect the United States and the European Union would expand their economic sanctions against Russia could push investors to withdraw more money from the country and cut new investment.
Russia's economy was faltering even before its troops took over Ukraine's Russian-speaking Crimean peninsula. The takeover has drawn sharp rebukes from U.S. and EU leaders, with U.S. President Barack Obama imposing a second round of economic sanctions against close associates of Russian President Vladimir Putin.
The Russian economy had been advancing a weak 1.3 percent before the crisis, but Russia now says growth will flatten in 2014.
Standard & Poor's said Russia's currency has already depreciated about 10 percent this year and expects that $60 billion would be withdrawn from the country in the first quarter of the year, similar to the level for all of last year.
S&P said it fears that violence between pro- and anti-Russian protesters could spread from Crimea to eastern Ukraine, leading to further conflict with the West.