The Japan Credit Rating Agency (JCR) on Thursday affirmed Turkey's foreign currency rating as "stable" and revised the country's local currency rating outlook to "positive" from "stable".
In a written statement released Thursday, JCR said that the Turkish economy which weathered the impact of the global financial crisis without any financial support from the IMF achieved a high economic growth from 2010 to 2011.
With the economy slowing down since the third quarter of 2011, the current account deficit turned decreasing on a y-o-y basis from late 2011. A prudent fiscal policy and flexible monetary policy aimed to manage both of domestic demand and international capital flows is certainly creditable about the turn. However, it is premature to judge if the dilemma of economic growth and the external balance is finally overcome yet, the JCR said.
Future developments of the problem need to be watched. On the other hand, thanks to the structural reforms carried out by the government since its standby arrangement with the IMF as well as other efforts made by the
government, the country’s fiscal position has significantly improved as compared to early in the 2000’s, the JCR stated.
The country’s banking sector which has assumed an important role in financing the government’s debt has maintained its stability despite the European debt crisis in 2011. Considering these factors positively, JCR has revised the outlook of the local currency rating to positive from stable. It has, however, affirmed the foreign currency rating as the economy’s dependence on external finance is hardly without concern under the on-going European debt crisis. JCR will see the possible impact of the crisis and the Turkish fiscal and economic performance under the growing prospect of deterioration in the world economy, the JCR statement also said.