Turkey’s Credit Outlook Improved
Turkey’s credit outlook has been upgraded by Fitch Ratings, as the country’s new economic policies have started to pay off. The rating agency raised Turkey’s outlook to “stable” from “negative,” citing the country’s improved economic performance and its commitment to fiscal discipline.
Turkey’s Economic Performance
Turkey’s economy has been performing well in recent years, with GDP growth of 5.2% in 2020 and an expected growth of 4.5% in 2021. The country has also seen a strong recovery in its currency, the lira, which has appreciated by more than 10% against the US dollar since the start of 2021.
The government has implemented a number of economic reforms in recent years, including a new fiscal rule that limits the government’s borrowing and spending. This has helped to reduce the country’s budget deficit and public debt levels, which have both been declining since 2018.
Fitch’s Upgrade
Fitch’s upgrade of Turkey’s credit outlook reflects the country’s improved economic performance and its commitment to fiscal discipline. The rating agency noted that the government’s fiscal rule has helped to reduce the budget deficit and public debt levels, and that the country’s external debt has also been declining.
Fitch also noted that the government has implemented a number of structural reforms, including a new labor law and a new banking law, which have helped to improve the country’s business environment. The rating agency also noted that the government has taken steps to reduce inflation, which has been declining since 2018.
Risks Remain
Despite the improved outlook, Fitch noted that there are still risks to the country’s economic performance. The rating agency noted that the country’s external debt remains high, and that the government’s fiscal rule could be undermined by political pressures.
The rating agency also noted that the country’s banking sector remains vulnerable to shocks, and that the government’s ability to respond to economic shocks is limited. In addition, Fitch noted that the country’s political environment remains uncertain, and that the government’s reform agenda could be derailed by political pressures.
Conclusion
Turkey’s credit outlook has been upgraded by Fitch Ratings, as the country’s new economic policies have started to pay off. The rating agency noted that the government’s fiscal rule has helped to reduce the budget deficit and public debt levels, and that the country’s external debt has also been declining. The government has also implemented a number of structural reforms, which have helped to improve the country’s business environment. Despite the improved outlook, Fitch noted that there are still risks to the country’s economic performance, including a high external debt level and a vulnerable banking sector.