Fitch downgrades Turkey’s credit rating
Fitch Ratings, the international credit rating agency has downgraded Turkey’s credit rating from B+ to B, and confirmed its outlook as “negative”. The agency had downgraded Turkey’s credit rating in February 2022.
Fitch’s assessment included the following statements regarding the downgrade of its credit rating:
“Uncertainty is observed to remain the same due to the increasing risks of retrospective indexing, the depreciation of the lira and the increase in exchange rate transitivity both in speed and in size. Fitch considers that selective macroeconomic policies aimed at reducing the pace of rapid credit growth do not reduce the risks to macroeconomic and financial stability.”
In its report, Fitch noted that the CBRT had kept its policy interest rate at 14 percent since December 2021, despite rapidly rising inflation, the impact of the war in Ukraine on commodity markets, and tightening monetary policy in most developed economies. The organization announced they predicted that annual inflation in Turkey would increase to an average of 71.4 percent in 2022, and this rate would decrease to 57 percent in 2023.
FITCH HAD DOWNGRADED TURKEY’S CREDIT RATING IN FEBRUARY 2022
Fitch had announced on February 12 that it downgraded Turkey’s credit rating from BB- to B+ with its decision and confirmed its outlook as “negative”. In its report published on this date, Fitch had stated that “more frequent and intense policy-oriented” periods of financial stress had increased high inflation, low external liquidity and vulnerabilities in terms of weak policy reliability in Turkey.
