The S&P rating agency has confirmed Armenia’s long-term credit rating at B+, with a stable outlook. The short-term rating is left at level B, according to the S&P statement.

B+ is 14th out of 22 on the S&P scale, with 1 being the highest rating.

So far, Western sanctions have not affected the Russian economy (along the chain—and the financial sector of Armenia) as significantly as analysts previously assumed, including due to high world oil and natural gas prices.

In addition, the influx of Russian citizens and capital has dramatically accelerated economic growth in Armenia. According to the authorities of the country, since February 2022, 1,700 companies from Russia, Belarus and Ukraine have opened in Armenia, and another 3,100 entities have registered as private entrepreneurs.

The number of non-resident employees in Armenia has grown to over 12,000.

Natural gas prices remain stable thanks to long-term agreements with Russia at a fixed price of $165 per thousand cubic meters, well below current world prices. This is important insofar as gas remains the main energy source for the Armenian economy (61% of the total energy balance) and about 80% comes from Russia, analysts say.

As a result, S&P significantly increased its forecast for the growth of the Armenian economy in 2022 from 1.3% immediately to 8.6%. In the next few years, growth is expected to average 4.3% per year.

However, the country  remains at risk of a secondary impact of anti-Russian sanctions. Russia accounts for about 30% of Armenia’s exports and about 40% of imports.

The agency’s experts also attribute the resumption of hostilities with Azerbaijan to significant risks for the Armenian economy.

Sanctions against Russia could also prevent the Armenian financial sector from getting loans from abroad.