Fitch affirms Turkey's rating at 'BB+,' outlook stable

By Ovunc Kutlu

NEW YORK

The global rating agency Fitch Ratings announced Friday that it affirmed Turkey's long-term foreign currency rating at 'BB+' with a stable outlook.

Turkey's rating is a balance of its high external financing vulnerabilities, political and geopolitical risks, high inflation and macroeconomic volatility; against low public debt, commitment to fiscal stability and strong growth performance, Fitch said.

The agency said the government's debt levels remain well below its "peers despite the widening of the deficit. Debt/GDP is estimated at 28.4% of GDP at end-2017, compared with a peer median of 47.8%."

However, the ratio of Turkey's current account deficit to GDP widened to an estimated 5.3 percent last year, from 3.8 percent the year before, Fitch said in its statement, because of "higher commodity imports."

With stimulus measures, growth in trading partners and recovery in the tourism sector, Turkey' economy is estimated to have grown by 6.8 percent in 2017, the agency said.

In addition, Turkey's average growth in the past five years, which is at 5.6 percent, is higher than the 3.5 percent average growth of its peers, Fitch said.

The agency said it forecasts economic growth slowing to 4.1 percent this year, due to tighter fiscal and monetary policies and the reduced availability of credit.

"Growth should rebound in 2019 to 4.7 percent, reflecting Fitch's expectation of renewed stimulus ahead of the elections," the statement said.

"Turkey is a large and diversified economy with a vibrant private sector," it added, noting that Turkey's GDP per capita is double the average of its peers.