S&P affirms Turkey's rating

Despite cautionary tone, ratings agency says Turkey's economy likely to grow by 4 percent this year, 3.2 percent next year

By Ovunc Kutlu

NEW YORK (AA) – Global ratings agency Standard & Poor's on Friday affirmed Turkey's sovereign rating at 'BB' with a negative outlook.

The agency said any changes in external financial conditions could restrict Turkey's financial and corporate sectors’ ability to roll over large external debt.

An economic slowdown could result in larger fiscal deficits and a rise in public debt and may lead the agency to lower Turkey's ratings, S&P warned.

"In addition, we could downgrade Turkey should monetary policy prove inadequate to curb inflation and currency pressures," the agency said in a statement.

"We also consider that the composition of Turkey's external financing (mostly debt with little equity) and the use of the proceeds (primarily investment in construction and public consumption) represent a risk to its future economic and financial stability," it added.

However, S&P said Turkey's negative outlook would be revised to stable if there is a reduction of the government's debt-to-GDP ratio, inflationary pressures are abated, there is a stabilization in the Turkish lira's value and growth prospects are gradually improved.

After expanding by 7 percent last year, S&P said it expects Turkey’s economy to grow by 4 percent this year and 3.2 percent next year.

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