International credit standing company Standard & Poor’s (S&P) revised Türkiye’s outlook from “negative” to “stable” and affirmed its credit standing at B on Friday.
The company mentioned the steady outlook displays “balanced risks” on Türkiye’s creditworthiness after a return to orthodox financial coverage settings because the Central Bank raises rates of interest.
“In an effort to disinflate and de-dollarize the economy, the Central Bank, under new leadership, has raised the key one-week repo rate by 21.5 percentage points since June, to 30%. To offset fiscal deterioration, the Treasury has introduced indirect taxes,” the worldwide ranking company mentioned in a press release.
“We believe that by 2026, absent renewed political uncertainty, the new team can rebalance Turkiye’s economy away from external debt-financed consumption and toward more balanced external and fiscal accounts, as well as more acceptable levels of inflation. Risks to this adjustment — both political and economic — are balanced,” it mentioned.
The company mentioned it may revise Türkiye’s outlook to constructive if the “effectiveness and independence of monetary and financial sector policies improved while Turkiye’s balance-of-payments position strengthened, particularly the CBRT’s (Central Bank’s) net foreign currency reserves.”
It additionally forecast Türkiye’s GDP progress to decelerate to three.5%, earlier than weakening to 2.3% in 2024.
Source: www.dailysabah.com