Moody's and Fitch Assessments on Turkey's Economy. 🇹🇷⚠️

In recent updates from credit rating agencies Moody's and Fitch, positive sentiments are expressed regarding Turkey's economic situation. Here's a summary of their key points:

🔝 Fitch's Perspective:

Fitch Ratings' Country Ratings Director, Paul Gamble, finds the normalization steps in Turkey reassuring for foreign investors.

Despite positive trends, Gamble emphasizes the need for time and acknowledges significant challenges.

The policy changes post-election are seen to reduce short-term macro-financial stability risks and payment balance pressures.

However, he highlights the importance of continued confidence in the sustainability of these policy adjustments.

🆙 Moody's Analysis:

Moody's acknowledges the potential for a positive outlook if the tight monetary stance is maintained, and wage agreements align with the Central Bank's inflation reduction goal.

Positive indicators include a decrease in the current account deficit and an increase in foreign exchange reserves, especially if tied to improved external competitiveness and sustained capital inflows.

Moody's suggests a return to orthodox monetary policy is a positive move and notes the substantial tightening by the Central Bank.

Concerns are raised about imminent inflationary pressures, especially with potential excessive wage increases, and the importance of broader economic stability.

⏩ General Observations:

Moody's has not issued a specific rating update but maintains Turkey's credit rating at B3 with a stable outlook.

Standard & Poor's (S&P) recently shifted its credit rating outlook for Turkey from stable to positive, citing evidence of the country's economic rebalancing.

📝 Factors for Positive Outlook:

- Improvement in payment balance results.

- Increase in domestic savings.

- Strengthening of the Turkish Lira.

- Rise in available foreign exchange reserves.

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