S&P confirms Turkey's rating at BB+

NEW YORK

Turkey's outlook was revised up to stable from negative, Standard & Poor's (S&P) said Friday.

The country’s foreign currency rating was confirmed at 'BB+' and its local currency rating was kept at 'BBB-', the global ratings agecny said in a statement.

"The Turkish economy was resilient to the challenges posed by the busy electoral calendar in 2015, the end of the peace process with Kurdish militants, heightened regional instability, and weak investor sentiment toward emerging markets," the statement read.

"The stable outlook reflects the balance between the resilience of the Turkish economy and modest fiscal deficits against lingering regional and domestic risks and still-high external financing needs," it added.

The stable outlook is a result of S&P's expectations that Turkish economic growth prospects will remain resilient to external shocks and domestic political risks.

The rating agency said it believes the Turkish government will post modest fiscal deficits, against lingering geopolitical risks and still-high external financing needs.

But S&P warned that uncertainties in the global economic environment and a possible increase in low U.S. interest rates could raise real interest rates in Turkey which could raise the risk of slowdown in its economy.

It also warned that a further increase in oil prices could trigger a slowdown in the Turkish economy because of the country's large net energy import bill.

The agency projects real GDP in Turkey to grow by 3.4 percent in 2016, compared to the 4 percent in 2015, despite the government's 30 percent increase in the minimum wage.

S&P also noted that Turkey's current account deficit narrowed to 4.5 percent of GDP in 2015, from 5.5 percent in 2014, mostly due to the low price of energy imports.