S&P raised Türkiye's credit rating

International credit rating agency Standard & Poor's (S&P) raised Türkiye's credit rating from “B+” to “BB-” and set the credit rating outlook as “stable”.
S&P announced its assessment of the Turkish economy.

In a statement made by the credit rating agency, it was reported that Türkiye's long-term credit rating was raised from “B+” to “BB-” and the credit rating outlook was “stable”. The country's short-term credit rating of “B” was also confirmed.

The statement said that the tight monetary policy stance of the Central Bank of the Republic of Turkey (CBRT) has allowed the Turkish authorities to stabilize the lira, reduce inflation, rebuild reserves and de-dollarize the financial system.

Türkiye's savings gap with the rest of the world has narrowed, the statement said, reflected in the nearly 4 percentage point decline in the current account deficit to Gross Domestic Product (GDP) ratio since 2022.

The outlook is stable, reflecting balanced risks over the next 12 months to the authorities' ambitious plans to reduce still-high inflation, manage workers' wage expectations and rebalance the Turkish economy.

The rating could be upgraded if further progress is made in bringing inflation down to single-digit levels and restoring long-term confidence in the Turkish lira and broader local capital markets, S&P said.

The statement pointed out that indexing the rate of increase in wage determination to the 2024 inflation rate of about 44%, rather than the government's 2025 year-end inflation target of 17% , is a risk to the anti-inflation program.

It is assumed that the wage agreement will be determined between these two extremes, but any increase rate higher than 30% will prolong the anti-inflation process.

With no elections scheduled in the country until 2028, there may be room to suppress demand and inflation through gradual fiscal and revenue policy tightening, the statement said.

Pointing out that the slowdown in private consumption will play a central role in cooling the Turkish economy, the statement said real GDP growth is projected to be 2.3% in 2025.

S&P had last raised Türkiye's credit rating from "B" to "B+" in May, while maintaining the credit rating outlook as "positive".