S&P affirms Armenia’s long-term/short-term foreign and local currency sovereign credit ratings at "B+"/"B" with "stable" outlook

YEREVAN, October 11. /ARKA/. The rating agency Standard and Poor's (S&P) has affirmed Armenia's long-term/short-term foreign and local currency sovereign credit ratings at "B+"/"B" with a "stable" outlook, the press service of the Ministry of Finance reported.

According to the agency, Armenia's sovereign rating will benefit from sustainable economic growth, reduction of geopolitical risks, Armenia's stronger external position and slower growth of foreign debt.

The ministry said the affirmation of the rating assigned to Armenia is a positive signal, especially given global and regional developments and associated macroeconomic uncertainty, indicating positive trends in economy growth rates, reliability of its social and economic reforms and, in particular, its macroeconomic policy.

The affirmation of the rating is based on the high economic growth registered by the country in the first half of the year, due to the inflow of people and capital, the growth of domestic demand as a result, high rates of tax revenue collection, as well as the reduction of the government debt-to-GDP ratio amid strengthening dram.

The "Stable" forecast stems from the agency's expectations of continued stable growth in the coming year and in the medium term. Possible consequences of economic recession in Russia - the main trade partner of Armenia and the main source of remittances, as well as existing factors in conditions of military tension with Azerbaijan are indicated as possible risks.

The Armenian government’s growth projection for 2022 is 7%; the inflation is set at 4% (± 1.5%). Armenia's Central Bank revised earlier upwards its economic growth forecast for 2022 from 4.9% to 12.9%.

According to the World Bank’s latest Global Economic Prospects report, Armenia's GDP in 2022 is expected to grow by 3.5%, down 1.3 p.p. from the previous forecast, made in January. World Bank analysts expect Armenia's GDP to grow by 4.6% in 2023 (0.8 p.p. down from the January forecast) and by 4.9% in 2024.

The International Monetary Fund (IMF) expects Armenia's GDP growth to reach 5 percent in 2022, while inflation is projected to increase temporarily before moderating by the end of the year.

The Asian Development Bank (ADB) said in its September update of the Asian Development Outlook report that it expects Armenia’s economy to grow by 7% in 2022 and to slower to 4.5% in 2023.-0-