The Standard & Poor’s agency has raised Turkey’s debt rating from B to B+ and has assigned it a “positive” outlook, the Turkish press reports this Saturday.
The US rating agency indicated in a statement, issued late on Friday (midnight in Türkiye) that Ankara “will continue efforts to reduce high inflation through a combination of tight monetary policy, less generous wage increases and gradual fiscal consolidation.”
Remember that there are no elections scheduled until 2028, so there are less pressure to raise salaries and pensions and the Turkish government “has room to apply policies that reduce demand and inflation.”
It is expected that the Central Bank will maintain interest rates at the current 50% for the rest of the year, but Inflation, currently at 69.8%, will take at least until 2028 to reach values below 10%.
Standard & Poor’s considers that the current account deficit will be below 2% of GDP in 2024 and predicts that The growth of the Turkish economy will remain at 3% during 2024 and 2025, compared to 4.5% in 2023.
He points out, according to the Efe agency, that “Restoring confidence in the local currency is a challenge for politicians”since the dollarization of citizen savings is declining very slowly, still covering 57% of all deposits, compared to 60% last November.
Among the positive points, the agency mentions the little dependence on Russia (recipient of only 2.5% of Turkish exports), the strong ties to the European Union, a young population (with an average age of 33 years compared to 44 in the EU) and a well-developed private sector, open to the outside and resilient.
