Thursday, December 22 2011 19:59
Fitch: Armenia and Georgia face the task to reduce foreign vulnerability factors
ArmInfo. Georgia and Armenia are moving forward in terms of reduction of budget deficits, Fitch's 2012 Outlook for European countries with developing economies says. Both countries were supported by international financial organizations over the crisis period, however, they face a more serious task to reduce the foreign vulnerability factors.
Fitch forecasts 3.5% growth for Russia in 2012. Kazakhstan and Azerbaijan, which are rich in natural resources, have a Positive outlook against the background of consolidation of sovereign balances, which outweighs the concern over the financial sector.
The main exception is Ukraine (B/ Stable outlook), whose steelmaking and chemical industry closely connects the country's positions with the economic cycle, and the increasing current account deficit intensifies the risks of foreign financing.
Fitch says that in 2012 the political risks may become more essential in the CIS after the Dec 4 2011 parliamentary election in Russia, which caused a lot of dispute.
On the whole, Fitch experts think that Russia and the CIS countries are in a less degree subject to the direct shock of instability in the Eurozone than the countries of Eastern Europe. Nevertheless, Fitch expects the growth in Central and Eastern Europe to be restrained by the sluggish growth of bank lending.
50%-90% of the banking system assets in eight countries of Central and Eastern Europe rated by Fitch (except the Baltic countries) fall on the braches of the Eurozone banks. Exacerbation of the crisis in the Eurozone may cause reduction of funding for these branches and make them rely on their own funds to a greater extent.
To recall, in September 2011 Fitch Ratings confirmed the long-term issuer default ratings of Armenia in the foreign and national currencies at "BB-"(Stable outlook). At the same time, the agency confirmed the short- term issuer default ratings in the foreign exchange at "B" and the country ceiling rating at "BB".
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