Credit ranking company Standard & Poor’s (S&P) raised Türkiye’s long-term sovereign credit standing to BB- from B+ with a secure outlook on Friday.
“The Central Bank of the Republic of Turkiye’s (CBRT’s) tight monetary stance has enabled Turkish authorities to stabilize the lira, bring down inflation, rebuild reserves, and de-dollarize the financial system,” it mentioned in an announcement.
“Turkiye’s savings gap with the rest of the world has narrowed, which is visible in the approximately 4 percentage points of GDP decline in the current account deficit since 2022,” it added.
The ranking company mentioned the secure outlook displays Türkiye’s balanced dangers over the following 12 months to authorities’ plans to convey down nonetheless elevated inflation, handle employees’ wage expectations and rebalance the Turkish economic system.
The secure outlook additionally displays the ranking company’s expectation that the present financial crew will persevere with tight financial coverage towards the implementation dangers related to the federal government’s medium-term program.
S&P warned that it may decrease the rankings if pressures on Türkiye’s monetary stability, or wider public funds had been to accentuate.
The company mentioned it may elevate the rankings, however, if there could be additional progress on bringing inflation down nearer to single-digit ranges and restoring long-term confidence within the Turkish lira and home capital markets.
“Evidence of this would include further de-dollarization of the share of foreign currency deposits in the Turkish banking system, and increased liquidity and depth of domestic capital markets, particularly for foreign exchange operations,” it mentioned.
S&P mentioned it tasks actual GDP development easing to 2.3% in 2025, down from 3.1% this yr, amid tighter credit score situations and decrease labor demand.
Those are anticipated to be partly offset by stronger exports of products and companies.
The ranking company expects a gradual financial restoration to take maintain starting in 2026.
Source: www.dailysabah.com