Fitch Ratings has revised the Outlook on Armenia's Long-Term Issuer Default Ratings (IDR) to Negative from Stable and affirmed the IDRs at "BB-", Fitch said on Friday, April 3.

"The coronavirus shock negatively affects the Armenian economy due to its exposures to commodities (a majority of exports), the Russian economy (for remittances, trade and FDI) and to tourism, only partially offset by the benefit of a lower oil price," the agency said.

Also, Fitch predicts that the Covid-19 shock will drag down GDP growth from 7.6% in 2019 to 0.5% in 2020 (a 4.4 percentage points downward revision since the last review six months ago).

The government has announced a state of emergency, with a support package totaling 2.3% of GDP, and the central bank has cut interest rates by 25bp to 5.25% following a fall in inflation to an average -0.1% in the first two months of 2020.

Fitch projects, however, that GDP growth partially recovers in 2021, to 5.5%, supported by a rebound in external demand, investment catch-up, and revival of private consumption and employment growth, with a moderate drag from fiscal tightening.