News - S&P Global Improves Armenia's Rating Outlook to Positive

In a significant move on February 20th, S&P Global Ratings upgraded Armenia's economic outlook from stable to positive. This decision is based on the anticipations of improved geopolitical conditions in the region, specifically through the potential progress in diplomatic and trade relations between Armenia and Azerbaijan. S&P Global retains Armenia’s sovereign credit ratings at 'BB-/B' for both long-term and short-term in foreign and local currencies. The upgrade suggests positive momentum stemming from Armenia's economic strategies and progress. The analysis points to Armenia's conducive growth environment and increasing international reserves managed by the Central Bank as key factors. Also notable is the beneficial impact of a flexible exchange rate which could cushion unforeseen external economic disruptions. S&P analysts highlight the economic potential amid persisting yet diminishing geopolitical security risks, institutional structures, and moderate income levels. The report underscores the strength of Armenia's prudent fiscal management and optimistic growth projections, backed by improved fiscal health and currency reserves. However, the ratings are curbed by the existing geopolitical and security challenges. Though negotiations with Azerbaijan may relieve immediate security risks, the durability of a peaceful agreement depends on a formalized and executed binding treaty. Political relations with Russia remain volatile, with Armenia continuing to weather dependencies on trade and financial flows from Russia. Nevertheless, the country's exchange with Russia remains a substantial element of its economic bedrock. The projected economic expansion within the state budget outlines growth of 5.1% in 2025 and 5.4% in 2026. The Central Bank's monetary policy report forecasts GDP growth under various scenarios of 5.9% in 2025, reaching up to 6.3% by 2026, and ranging between 4.9% to 5.3% in 2027. Global financial institutions such as the Eurasian Development Bank foresee growth rates for 2025 and 2026 at 6% and 5.3%, respectively. Similarly, the World Bank anticipates growth at 5.2% and 4.9%, while the IMF predicts 5% and 5.5%, and the EBRD expects 5% and 4.5% during the same periods.