S&P affirms Turkey's credit rating, outlook stable

S&P on Oct. 22 affirmed Turkey's long-term foreign currency rating at "B+" and long-term local currency rating at "BB-," with a stable outlook.

The stable outlook considers the risks from Turkey's economic imbalances, but these are partly offset by the resilience of Turkey's private sector and the manageable stock of net general government debt, the global rating agency said.

"Our ratings on Turkey remain supported by its diversified economy and resilient and adaptive private sector, which, in the past, has weathered external shocks, currency volatility, and frequent changes in economic policy," it said in a statement.

"Turkey's economy has recovered faster than those of other emerging markets, with real output already 8.4% above the pre-pandemic peak as of the second quarter of 2021," it added.

The agency said it expects Turkey's economy to expand by 8.6% this year with a strong recovery in exports and resilience of domestic activity to the pandemic.

It said Turkey's credit rating would be upgraded if balance of payments are strengthened, especially the central bank's net foreign-exchange reserves.

The rating would also be revised up if there is an effectiveness in monetary policy, it added.

"The Turkish economy rebounded briskly from a pandemic-related downturn last year, and has continued to expand in 2021," the statement said.

"In real terms, output had already exceeded the pre-pandemic peak in the third quarter of 2020, and now stands 8.4% above the pre-pandemic level attained in the first quarter of 2020," it added.

Noting that Turkey has fully vaccinated more than 55% of its population, with almost 65% having received at least one jab, S&P said pandemic risks for the Turkish economy are now...