Turkey’s Credit Rating Upgraded by Fitch Ratings
Fitch Ratings Upgrades Turkey’s Credit Rating to “BB-” with Stable Outlook
Fitch Ratings recently announced its assessment of the Turkish economy, revealing an upgrade in the country’s long-term foreign currency credit rating from “B+” to “BB-“, with a stable outlook. This improvement reflects positive indicators such as real interest rates, low current account deficits, and a gradual decrease in foreign exchange-protected deposits.
The credit rating agency expressed confidence that Turkey’s external buffers will continue to strengthen, with reserves expected to reach $158 billion by the end of this year and $165 billion by 2025. This positive outlook is supported by a combination of tight monetary policies, fiscal consolidation measures, and prudent minimum wage adjustments, which are anticipated to lead to a significant decrease in inflation rates.
Fitch predicts that inflation will reach 43 percent by the end of this year, with a projected decrease to 21 percent by 2025. Additionally, the current account deficit is forecasted to decline to 1.9 percent of GDP in 2021 and maintain an average of 1.7 percent in the following years. Despite the ongoing support for Turkey’s economic program from political leaders, there is still a risk of potential policy reversals.
In terms of economic growth, Fitch anticipates a 3.5 percent growth rate for Turkey in 2021 and a 2.8 percent rate in 2025. The gradual recovery expected in the European Union is seen as a positive factor that will support Turkey’s net exports.
This latest credit rating upgrade follows previous adjustments by Fitch Ratings, with Turkey’s credit rating moving from “B” to “B+” in March of this year, and experiencing a shift in outlook from “negative” to “positive”. These developments highlight a positive trajectory for the Turkish economy and its financial outlook.
