Standard & Poor's Revises Turkey's Credit Outlook to Positive

According to the statement, policymakers have made progress in cooling the overheated economy, and the Central Bank of the Republic of Turkey (CBRT) is gradually rebuilding its depleted net foreign exchange reserve stock.

The statement highlighted the interest rate hikes implemented by the CBRT since June and emphasized the reduction in the country's twin deficits.

It mentioned that the budget deficit for the year 2023 is expected to be lower than the targeted percentage of 4.3% of gross domestic product (GDP), and with a sharp decrease in imports, the current account deficit is predicted to gradually narrow.

The announcement confirmed Turkey's credit rating as "B" and stated that the credit outlook has been revised from "stable" to "positive." It also noted that if the balance of payments improves further, foreign exchange reserves increase more rapidly, and a decrease in dollarization is observed within the next 12 months, the long-term country rating could be upgraded by one notch.

The statement expressed expectations that Turkey's new economic team tightening credit conditions would help the economy avoid a direct recession. It highlighted recent data confirming a slowdown and rebalancing of the Turkish economy since the beginning of the third quarter, with weakening consumption.