US-based international credit ratings agency S&P Global Ratings has announced an upgrade of Turkey’s credit rating from “B” to “B+”, maintaining its positive outlook for the country. The agency expects Turkey to improve coordination between monetary, fiscal and income policies, following the recent local elections in the country.
“We forecast narrowing current account deficits over the next two years, alongside declining inflation and dollarization, although progress will be slow as the central bank limits depreciation of the Turkish lira,” S&P, said. The agency expects Turkey’s GDP growth to be at three percent both in 2024 and 2025, 2.8 percent in 2026 and 3.5 percent in 2027.
S&P noted that, with no scheduled national elections until 2028, Turkish policymakers have space to implement policies to compress demand and inflation, using fiscal, and monetary tools. Whether and how quickly the Turkish authorities tackle the inflation problem will affect economic stability, public finances, and hence the agency’s sovereign rating on Turkey.