Fitch Confirms Turkey’s Credit Rating
Fitch Ratings has confirmed Turkey’s sovereign credit rating at “BB” with a stable outlook. In its latest assessment, the agency raised its growth projection for Turkey in 2020 from 3.1% to 3.9%. Fitch noted that the economy has rebounded strongly, inflation has fallen from around 20% seen at the start of last year, and the current account deficit has shown signs of improvement. Although external risks remain elevated, they are easing.
2020 Growth Forecast Raised to 3.9%
Fitch Ratings revised up its growth forecast for Turkey in 2020 by 0.8 percentage points, reflecting a stronger-than-expected recovery. The agency now expects real GDP to expand by 3.9% in 2020. The upward revision largely stems from a gradual recovery in investment and stronger private consumption. Lower interest rates and the swift improvement in credit conditions have also supported domestic demand.
For 2021, Fitch projects growth of around 4.0%. However, the statement highlighted that Turkey’s high financing needs remain a source of vulnerability. The agency expects the current account deficit to narrow to about 0.9% of GDP in 2020 and to widen to roughly 1.8% of GDP in 2021. Inflation is projected to average around 10.5% by the end of 2020 and to ease slightly to about 10% by the end of 2021. Banks’ foreign currency borrowing is expected to remain broadly stable over the year.