Fitch Ratings upgraded Turkey to investment grade on Monday, highlighting an easing of near-term risks and underlying credit strengths, a move Ankara praised as “validation of a belated right.”
The agency said it was upgrading Turkey’s long-term foreign currency Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BB+’ and the long-term local currency IDR to ‘BBB’ from ‘BB+.’
Fitch commented that “the Turkish economy is on track to return to a sustainable growth rate,” after narrowing its current account deficit and lowering its inflation.
“Achieving such a rebalancing without a recession -- helped by a strong trade performance, while unemployment is at an 11-year low -- points to enhanced economic flexibility and resilience,” Fitch said in its written announcement.
The ratings agency cited a declining government debt, a sound banking system and favorable medium-term growth prospects as part of the strengths which contributed to the upgrade of the rating.
The move was immediately welcomed by Ankara, with Economy Minister Zafer Caglayan saying the upgrade is “the reinstatement and validation of a belated right.”
The minister said that “I hope the upgrade gives direction to the other ratings’ agencies.”
The agency said it has also upgraded Turkey’s Short-term foreign currency IDR to ‘F3’ from ‘B’ and the Country Ceiling to ‘BBB’ from ‘BBB-.’ The outlooks on the long-term ratings were stable.