MOSCOW, Jan 26 (Reuters) - Moody’s said on Friday it had raised Russia’s sovereign outlook to positive from stable, expecting 2018 growth to largely overcome the adverse base effect caused by the industrial output-led slowdown in the last quarter of the past year.

The reasons behind the decision are growing evidence of institutional strength and increased evidence of economic and fiscal resilience that has reduced Russia’s vulnerability to further external shocks arising from geopolitical tensions or from renewed declines in oil prices, the rating agency said.

It currently rates Russia Ba1. Moody’s also said it expected the changes would lessen, but not eliminate, the economic volatility seen in the recent years. “More importantly from a credit perspective, Moody’s expects the recent macro gains to be sustained over the longer term,” it said. Russian Finance Minister Anton Siluanov said in a statement on Friday he hoped that “the macro stability which has formed in the Russian economy... would allow for rating agencies to raise the ratings themselves, not outlooks only”.

The Russian economy, hurt by weak energy prices and Western sanctions in past years, returned to moderate growth late in 2017.

In the last year as a whole, the economy has grown by 1.4-1.8 percent, according to preliminary estimates. (Repotring by Denis Pinchuk and Darya Korsunskaya, Editing by Katya Golubkova)