The international ratings agency Fitch has downgraded Armenia's long-term foreign and local currency Issuer Default Ratings from BB-to B+, the rating outlook is stable.
"The issue ratings on Armenia's senior unsecured foreign and local currency bonds are also downgraded to B+ from BB-.
The Country Ceiling has been revised to BB- from BB and the Short-term foreign currency IDR affirmed at B," the official website of the agency says.
Fitch analysts noted that the negative phenomena in the Russian economy (BBB- /negative outlook) greatly affect Armenia, and that in this regard there are risks to the balance of payments and economic growth prospects. This year, Armenia's economy is expected to experience a moderate recession associated with certain risks due to the deterioration of the Russian economy and further pressure on the national currency.
The current account deficit in 2015 could increase again due to the reduction of transfers and the Russian demand for Armenian exports. Transfers, which account for about 15% of Armenia's GDP, in the last months of 2014 decreased by 30%, and 90% of their volume is supplied from Russia.
The prices for non-ferrous metals (including copper) could decline, RIA Novosti reports. It should be noted that on January 16 the international rating agency Moody's downgraded the rating of government bonds ceilings of Armenia from Ba2 to Ba3 and downgraded the ratings outlook from stable to negative.
The head of the analytical center "Alternative", Tatul Manaseryan, told Vestnik Kavkaza that Fitch's decision was politically motivated, not only economic. "I respect these rating parameters, but recently there is a certain tendency to attribute economic developments and trends in Armenia with the integration of the country into the Eurasian Economic Union. The forefront experts give top priority to such one-sided dependence in revising the positions of Armenia," the expert said. He recalled the recent lowering of the rating of Armenian banks by Moody's. "Armenia's dependence on a strategic partner, Russia, was among the arguments, while there are negative trends in Russia, such as declining growth, which have affected the Armenian economy. I think this is a somewhat biased opinion, and do not exclude that such positions were involved in the revision of the Fitch ratings. Investors and business, of course, pay attention to these assessments, but it does not fully reflect the economic reality," Manaseryan said, adding that the downgrade affects the investment environment. The Economist reported that, according to forecasts, if taking into account economic growth in the republic in 2015 of 4%, then the growth rate this year will be no less. "Armenia is facing new opportunities for integration into the EEU, which provides a hundredfold increase in the consumer market and new opportunities for cooperation with the countries of the Union. Also, Armenia is not closing the door to integration with European countries. When the economy recovers through development of the mining industry, tourism and information technology in knowledge-intensive industries, I believe this rating will be revised sooner or later," Manaseryan concluded.
The head of the analytical center "Alternative", Tatul Manaseryan, told Vestnik Kavkaza that Fitch's decision was politically motivated, not only economic.
"I respect these rating parameters, but recently there is a certain tendency to attribute economic developments and trends in Armenia with the integration of the country into the Eurasian Economic Union. The forefront experts give top priority to such one-sided dependence in revising the positions of Armenia," the expert said.
He recalled the recent lowering of the rating of Armenian banks by Moody's. "Armenia's dependence on a strategic partner, Russia, was among the arguments, while there are negative trends in Russia, such as declining growth, which have affected the Armenian economy. I think this is a somewhat biased opinion, and do not exclude that such positions were involved in the revision of the Fitch ratings. Investors and business, of course, pay attention to these assessments, but it does not fully reflect the economic reality," Manaseryan said, adding that the downgrade affects the investment environment.
The Economist reported that, according to forecasts, if taking into account economic growth in the republic in 2015 of 4%, then the growth rate this year will be no less. "Armenia is facing new opportunities for integration into the EEU, which provides a hundredfold increase in the consumer market and new opportunities for cooperation with the countries of the Union. Also, Armenia is not closing the door to integration with European countries. When the economy recovers through development of the mining industry, tourism and information technology in knowledge-intensive industries, I believe this rating will be revised sooner or later," Manaseryan concluded.
