S and P Global revises Trkiye’s outlook to positive from stable

Data provider and credit rating agency S and P Global revised its outlook on Trkiye from stable to positive on Thursday, affirming the country rating at “B”.

It acknowledged that Turkish policy makers have been making progress on cooling down the country’s “overheated” economy and rebuilding its Central Bank’s depleted stock of net foreign currency reserves.

The bank has increased its policy interest rate by 31.5 percentage points since June, it added, underlining that the Turkish economy is both slowing and rebalancing, with consumption softening since the start of the third quarter.

“Trkiye’s twin deficits are declining. We project that the fiscal deficit for 2023 will be lower than targeted at 4.3% of GDP, and that the current account deficit will gradually narrow as imports decline sharply during the last four months of the year and into 2024,” it said, adding:

“Credit conditions are tightening, and fiscal support is tapering. Recent dollar weakness, and a stabilization of US interest rates have also
reopened a window for some Turkish corporates, banks, as well as the sovereign, to issue external commercial debt.”