By Mark Dovich
Fitch, one of the “big three” rating agencies, upgraded the Armenian government’s credit outlook last Friday to “positive” from “stable,” citing last year’s influx of tens of thousands of Russians — and billions of dollars — to the country.
“A very large influx of immigrants and capital from Russia in 2022 has boosted external as well as macroeconomic and fiscal performance,” Fitch said. “It led to a 140% increase in remittances/money transfers and Fitch anticipates that a substantial proportion of new immigrants will stay in Armenia for at least two to three years.”
Banks in Armenia recorded an unprecedented net inflow of about $2.5 billion in transfers last year, according to Central Bank data. Martin Galstyan, the head of the Central Bank, said at a press conference last month that over 70% of the transfers came from Russia.
Figures from Armenia’s Migration and Citizenship Service show that over 1.1 million Russian citizens traveled to Armenia last year amid fallout from Russia’s full-scale invasion of Ukraine in February. It is believed that about 65,000 of them have stayed.
Fitch also pointed to Armenia’s strong economic growth last year, easing inflation, and “strong governance indicators,” among other factors, as influencing its decision.
In a report last month, the United Nations estimated Armenia’s real GDP growth last year at 14%, giving the country the highest year-on-year growth of any former Soviet country. The average growth rate last year in the Commonwealth of Independent States, a grouping of ex-Soviet countries, was -3.3%.
Meanwhile, Fitch kept Armenia’s long-term foreign-currency issuer default rating at “B+,” indicating a relatively high level of credit risk. Fitch gives slightly better ratings to both Georgia and Azerbaijan, at “BB” and “BB+” respectively.