S&P upgrades Türkiye’s credit rating from B to B+, keeping outlook ‘positive’

U.S.-based credit rating agency Standard & Poor’s (S&P), a leading credit rating agency, has announced its evaluation of the Turkish economy.

In a press release issued late on Friday, it was revealed that Türkiye’s long-term credit rating has been upgraded from “B” to “B+”, keeping its outlook positive.

The statement highlights expectations of improved coordination between monetary, fiscal, and revenue policies in Türkiye, especially following local elections and amidst external rebalancing.

It suggests that over the next 2 years, there will be an increase in portfolio inflows, a reduction in current account deficits, and a decline in both inflation and dollarization.

“We forecast rising portfolio inflows and narrowing current account deficits over the next two years, alongside declining inflation and dollarization, although progress will be slow and reserve accumulation modest as the central bank limits depreciation of the Turkish lira,” the agency said.

S&P hinted at the possibility of further upgrades

Policy makers are urged to focus on lowering inflation and restoring confidence in the Turkish lira. The statement emphasizes that if authorities successfully manage to reduce inflation and restore trust in the currency amid narrowing current account deficits and reversing dollarization, Türkiye’s credit rating could see further upgrades.

Furthermore, the statement includes forecasts for the country’s economy, projecting a 3% growth for this year and the next. It also predicts consumer price inflation to be 55.8% this year and 27.3% next year.

S&P’s decision to upgrade Türkiye’s credit rating outlook comes after recent policy adjustments.

In December, the agency shifted the country’s credit rating outlook from “stable” to “positive.”

This move follows similar actions by other credit rating agencies, with Moody’s upgrading Turkey’s credit rating outlook in January and Fitch Ratings raising Türkiye’s credit rating in March.