Moody’s upgrades Armenia’s credit outlook to stable

Yerevan's Republic square. Photo by Karen Harutyunyan.

By Mark Dovich

Moody’s, one of the ‘big three’ global rating agencies, has upgraded the Armenian government’s credit outlook from negative to stable, citing last year’s “surge in income, capital, and labor from Russia.”

Credit rating agencies evaluate a country’s ability to pay back debt and its likelihood of defaulting. Moody’s, alongside Fitch and S&P, is known as one the ‘big three’ agencies because it dominates the global market.

Armenia’s gross domestic product grew by 12.6% last year, largely on the back of an unprecedented influx of more than 100,000 Russian citizens. Many are highly skilled information technology workers.

The agency said the rating “balances Armenia’s robust growth potential and moderately high institutions and governance strength, against its relatively small and middle-income economy…and elevated geopolitical risks.”

Moody’s upgrade comes months after the other two major rating agencies, Fitch and S&P, each raised Armenia’s credit outlook from stable to positive, also citing last year’s influx of Russians.

In its update, S&P noted it is “unlikely there will be a sharp reversal in financial and labor inflows to Armenia in the next 12 months,” echoing Fitch’s earlier prediction that “a substantial proportion of new immigrants will stay in Armenia for at least two to three years.”

S&P is forecasting Armenia’s GDP will increase by 4% this year, while Fitch and Moody’s are anticipating substantially higher growth, at 6.3% and 7%, respectively.

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