S&P upgrades Türkiye's outlook from 'negative' to 'stable,' affirms 'B' rating

U.S.-based credit ratings agency Standard & Poor's (S&P) on Friday affirmed Türkiye's credit rating at B and revised its outlook from "negative" to "stable."

The agency said the stable outlook reflects "balanced risks" on Türkiye's creditworthiness after a return to orthodox monetary policy settings as the Central Bank raises interest rates.

"In an effort to disinflate and de-dollarize the economy, the Central Bank, under new leadership, has raised the key one-week repo rate by 21.5 percentage points since June, to 30%. To offset fiscal deterioration, the Treasury has introduced indirect taxes," the global rating agency said in a statement.

"We believe that by 2026, absent renewed political uncertainty, the new team can rebalance Turkiye's economy away from external debt financed consumption and toward more balanced external and fiscal accounts, as well as more acceptable levels of inflation. Risks to this adjustment — both political and economic — are balanced," it said.

The agency said it could revise Türkiye's outlook to positive if the "effectiveness and independence of monetary and financial sector policies improved while Turkiye's balance-of-payments position strengthened, particularly the CBRT's (Central Bank's) net foreign currency reserves."

It also forecast Türkiye's GDP growth to decelerate to 3.5%, before weakening to 2.3% in 2024.