S&P Global Ratings affirmed credit ratings on Armenia

S&P Global Ratings affirmed its 'BB-/B' long- and short-term foreign and local currency sovereign credit ratings on Armenia. 

The outlook on the long-term ratings remains positive.

S&P Global Ratingsэы press release reads: 

“The positive outlook reflects the potential for Armenia to establish a track record of external resilience, supported by sustained buildup of external buffers and continued progress toward normalizing relations with Azerbaijan, which together could reduce balance-of-payments and geopolitical vulnerabilities over time.

We could revise the outlook to stable should regional geopolitical risks escalate markedly or labor and capital inflows from Russia sharply reverse, weighing on Armenia's economic, fiscal, and balance-of-payments performance.

We could raise the ratings if Armenia's balance of payments continues to demonstrate resilience against security and geopolitical risks. This could be supported by further foreign currency reserve accumulation, alongside further progress in normalizing relations with Azerbaijan. A positive rating action could also follow if regional geopolitical risks recede durably”.

The proposed Trump Route for International Peace and Prosperity (TRIPP) could enhance regional connectivity and support trade and investment over the medium term. While the framework agreement establishes the initiative's core governance and sovereignty arrangements, implementation remains at an early stage, with project areas, financing, and detailed concession terms yet to be finalized.

We forecast Armenia's real GDP growth to slow to 4.9% in 2026, down from 7.1% in 2025, 
partly reflecting weaker consumption and export performance following Russia's restrictions on selected Armenian goods. While exporters are likely to redirect some trade flows toward alternative markets, including the EU, the episode highlights Armenia's continued dependence on the Russian market and the vulnerability of certain export sectors to bilateral trade disruptions. Nevertheless, strong investment activity should help support growth. From 2027-2029, we expect Armenia's growth rate to average 5% supported by consumption and investment activity.

Armenia's international reserves have continued strengthening materially in 2026, reinforcing an important external buffer despite elevated regional geopolitical tensions. Gross foreign currency reserves increased to a record $6.9 billion in June, up 46% from the same period last year. This increase was driven by a combination of government Eurobond issuance, central bank foreign currency purchases, and strong financial and capital inflows from abroad. We anticipate that Armenia's foreign currency reserves will remain broadly stable.

We think that Armenia's external position has improved significantly over the last few years due to a gradually appreciating currency, stronger external buffers, and higher current account receipts. Narrow net external debt, measured as a share of current account receipts, has declined from almost 109% in 2020 to about 50% in 2025. Barring additional external shocks, we expect external metrics to gradually and broadly improve over the forecast period, supported by continued reserve accumulation and prudent external borrowing, further reducing Armenia's external vulnerability”.