Fitch Ratings has revised Armenia's Outlook to Positive from Stable, while affirming the sovereign's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+'.

The economy is experiencing a strong recovery following a large external shock in 2014-15, driven by a structural improvement in export performance, firmer external demand conditions and recovering remittances, and supported by a credible monetary policy framework. Fitch has revised up its growth projection to 4.3% for 2017 from 3.4% previously, as GDP growth averaged 5.3% in 1Q-3Q.

The agency expects growth to average 3.6% in 2018-2019 due to a still favourable environment for remittances and export growth.

Fitch forecasts the general government budget deficit will shrink to 3.3% of GDP in 2017, from 5.5% in 2016, reflecting expenditure restraint and favourable revenue growth. Fitch expects the general government deficit to narrow further to 3% in 2018 and 2.7% in 2019, below the 'B' and 'BB' medians.

Armenia is exposed to external shocks but has shown a capacity to absorb them, helped by a credible monetary policy framework, Fitch says.

The banking system remains stable with strengthened capitalisation (capital adequacy ratio (CAR) 19.1% in October).