Japan Credit Rating Agency affirms Turkey's rating

By Gokhan Ergocun

ISTANBUL (AA) - Japanese Credit Rating Agency (JCR) on Friday maintained both the long-term foreign and local currency ratings of Turkey at BBB- with a negative outlook.

JCR said Turkey achieved to drop inflation rate, which hit the 25% level last year, to around 10% level without external support such as the International Monetary Fund (IMF).

Following the decline in interest rates from 24% to 14%, and with the improvement of relations with the U.S., the Turkish financial market regained stability, it said.

Saying that the Turkish economy has narrowed during consecutive three quarters beginning from the last quarter of 2018, it noted: "But it has been rebalancing, with the current account turning around into surplus."

It added: "The Turkish government, backed by its solid fiscal base, has been supporting the economy to prevent it from hitting rock bottom by tolerating a general government budget deficit equal to about 3% of GDP."

"However, their foreign currency financing is susceptible to sudden changes in the external environment, such as political conditions at home and abroad, and the uncertainty over fulfillment of their external financing needs has not yet been resolved," it said.

For this, the agency affirmed the rating with a negative outlook, it underlined.

It also said the Turkish economy will close 2019 with a modest positive growth rate and a small current surplus.

"Under its New Economic Program (NEP) announced in September 2019, the government clarified its stance to support growth by expanding the general government budget deficit for the next three years including 2019 to around 3% of GDP," it said.

"JCR expects that the economy will return to a moderate expansion trend from 2020-2022 under those fiscal and monetary policies," it added.