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Ministry of economic development of the Russian Federation

International rating agencies revised development outlooks for EAEU countries' economies amid COVID-19 pandemic


Following the Q2 2020 results, international rating agencies have updated development outlooks for the Eurasian Economic Union States’ economies amid the COVID-19 pandemic.

For instance, Moody's has updated its development outlook for the Republic of Kazakhstan's economy (credit rating "Baa3" with a positive trend). The updated outlook is based on the assumption that in 2020 the average price of Brent oil would be 35 US dollars/barrel and 45 US dollars/barrel in 2021. According to the new outlook, the Republic of Kazakhstan's economy will slightly scale back in 2020 (-0.5% of GDP) and will get a boost of 3% next year.
In view of the worsening situation with the COVID-19 pandemic and some decline in oil production volume, Fitch revised its development outlook for the Russian Federation's economy. In 2020, Russia's GDP is expected to decline by 5.8% (according to the previous April outlook, a 5% decline was expected). Along with that, the estimate of global GDP dynamics remained unchanged in the new outlook (a 4.6% decrease).
Fitch Rating Agency has also revised its outlook on the sovereign credit rating of the Republic of Armenia from stable to negative ("BB-" rating with a negative trend).
The Agency's analysts expect that the COVID-19 pandemic will negatively affect Armenia's economic growth rate due to a decrease in commodity exports, money transfers from individuals, trade, foreign direct investment from the Russian Federation and falling incomes from the tourism sector caused by the forced border closures.
At the same time, rating agencies have confirmed the sovereign credit ratings of the Republic of Belarus and the Kyrgyz Republic: Fitch and Standard&Poor's kept the rating of Belarus unchanged, and so did Moody's with the rating of Kyrgyzstan.
However, the agencies emphasize that the outlooks bear a high level of uncertainty, since the scale of COVID-19 impact on national economies is not yet clear.
The ranking of world countries by degree of economic freedom was updated in Q2 2020 as well (The Heritage Foundation's Index of Economic Freedom 2020). Singapore takes the lead in the 2020 ranking, followed by Hong Kong, New Zealand, Australia and Switzerland.
Armenia, Belarus and Russia have moved up one category in the 2020 ranking compared to 2019. In particular, nowadays the Republic of Armenia (34th place) belongs to the group of "mostly free countries" and the Republic of Belarus (88th place), the Republic of Kazakhstan (39th place), the Kyrgyz Republic (81st place) and the Russian Federation (94th place) belong to the group of "moderately free countries".
In general, the EAEU countries’ strengths are the state of fiscal system, low tax burden, freedom of enterprise and trade.
Source: EEC

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