Fitch Ratings expects Armenia's economy to grow by 3.5% in 2016, up from 2.0% at the time of its last review.

In 2015 the country's economy grew by 3%.2016 started strongly, Fitch said, with the economy growing by 4.4% year on year in 1Q16.

The Armenian government’s projection of GDP growth for 2016 is 2.2%. The World Bank and the IMF both forecast 1.9% growth.

Also, Fitch affirmed Armenia's Long-Term Foreign and Local Currency IDRs at 'B+' with Stable Outlooks. The issue ratings on Armenia's senior unsecured Foreign-Currency bonds have also been affirmed at 'B+'. The Country Ceiling has been affirmed at 'BB-' and the Short-Term Foreign Currency IDR at 'B.'

Fitch has assigned a new Short-Term Local Currency (STLC) IDR rating of 'B' which.

Fitch Ratings has applied its revised Sovereign Criteria dated July 18, 2016 to assign new Short-Term Local Currency (STLC) IDRs.

The 'B+' rating is supported by Armenia's favorable business climate, relatively high per capita income level, IMF Extended Arrangement program, and the extended maturity profile and low interest burden of public debt.

Conversely, the ratings are weighed down by high net external debt, the large share of public debt denominated in foreign currency, a highly dollarized banking sector and tensions in relations with some neighboring countries.

Armenia's economy continues to grow at a healthy rate, and Fitch expects this to remain the case during the forecast period, despite the continued negative external shock from Russia and the wider CIS region.