Fitch Ratings has revised the Outlook on Turkey's Long-Term Issuer Default Ratings (IDRs) to Negative from Stable and affirmed the IDRs at 'BB-," Report says, citing the statement of the Agency.
A depletion of foreign exchange reserves, weak monetary policy credibility, negative real interest rates, and a sizeable current account deficit partly fuelled by a secure credit stimulus, have exacerbated external financing risks.
There have been significant currency interventions to defend the lira, which has depreciated 16% against the US dollar since March on the back of net capital outflows and a worsening trade deficit.
Fitch forecasts the economy contracts by 3.9% in 2020, with private consumption leading the recovery from a fall in 2Q20 GDP of around 10%. There has been a broad-based lifting of lockdown measures, helped by Turkey's moderate incidence of COVID-19 cases. We forecast GDP growth of 5.4% in 2021 and 4.6%, also supported by a recovery in investment and tourism.