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Fitch Affirms Turkey’s Credit Rating at 'BB-'

Fitch Affirms Turkey’s Credit Rating at 'BB-'

Sunday, 21 February, 2021 - 10:15
Fitch affirmed Turkey's credit rating at 'BB-' | (Reuters)

Fitch Ratings revised Turkey's outlook to stable from negative and affirmed its credit rating at 'BB-'.


“Turkey's return to a more consistent and orthodox policy mix under a new economic team has helped ease near-term external financing risks derived from last year's falling international reserves, a high current account deficit, and deteriorating investor confidence,” the agency revealed.


"Monetary policy has been significantly tightened, international reserves have stabilized, and the Turkish lira has appreciated by 18 percent against the US dollar since early November," the global rating agency said in its statement.


The agency highlighted that the Turkish central bank has simplified monetary policy.


“After a strong sequential recovery in 3Q20, the economy has likely maintained positive growth momentum despite the tightening of anti-pandemic measures, thus resulting in a full-year growth of 1.4 percent in 2020,” according to Fitch.


Fitch forecast “a full-year growth of 5.7 percent in 2021 and 4.7 percent in 2022.”


“We forecast that inflation will decline to 11 percent at end-2021 and 9.2 percent at end-2022, compared with the current central bank forecast of 9.4 percent and 7 percent, respectively,” Fitch said.


Earlier, Turkey's Central Bank Governor Naji Aghbal revealed a slowdown in the Turkish economy in 4Q20 due to the monetary policy and the decline in credit.


He said that the Turkish lira gains against the dollar will reduce inflationary pressures.


Aghbal added: “Producer price inflation will continue to rise, so consumer prices will continue to be under pressure.”


The drop in exchange rates of foreign currencies against the Turkish lira, in the past three months, reduced the inflation, the governor said.


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