RAEX-Europe has confirmed the sovereign government credit rating (SGC) of Armenia at ‘BB-’ (Sufficient level of creditworthiness of the government) in national currency and at ‘BB-’ (Sufficient level of creditworthiness of the government) in foreign currency.

The rating outlook changed from stable to negative, which means that in the mid-term perspective there is a high probability of downgrading the rating score.

"However, we anticipate the Central Bank of Armenia (CBA) to continue to maintain an adequate expansionary monetary policy. In addition, the inflation rate remains low and has risen only slightly closer to the end of the year whereas the banking system demonstrates a stable stance," the agency said.

"The contraction of the Armenian economy due to the Covid-19 pandemic is higher than expected. As of 3Q 2020, the real GDP plummeted by 6,6% y-o-y and we estimate the overall contraction of the economy to have been around 7,3% by the end of 2020."

Taking into account both the pandemic and the recent war in Nagorno-Karabakh, the agency expects the real GDP output to turn positive not earlier than by the end of 2021 (in the range between 0,5% and 1,5%) and start approaching its pre-crisis level not earlier than in 2022.

The World Banks said earlier that Armenia's economy will contract by 8% in 2020 and bounce back and grow by 3.1% and 4.5% in 2021 and 2022, respectively.