Fitch downgrades Turkeys outlook rating to stable.

By bne IntelliNews November 24, 2011
Fitch has announced that it revised the outlooks on Turkeys long-term foreign and local currency issuer default ratings to stable from positive and affirmed the ratings at BB+. Fitch said that the revision reflected an increase in near-term risks to macroeconomic stability as Turkey faced the challenge of reducing its large current account deficit and above-target inflation rate against the background of deterioration in the global economic and financing environment. Ed Parker from Fitch commented that the ratings were supported by favourable government debt dynamics, a healthy potential growth rate and a strong banking sector thus if Turkey attained a soft landing and near-term macro-financial risks receded, then upward rating dynamics could resume. Fitch expects CA deficit to increase to 9.8% of GDP in 2011 from 6.5% of GDP in 2010, before easing to 7.6% in 2012. Fitch's GDP growth forecasts for 2011 and 2012 are 7.5% and 2.2%, respectively and the rating agency expects GDP growth to bounce back to 4.5% in 2013. Fitch forecasts the budget deficit to decline to 1.3% of GDP in 2011, from 3.3% in 2010 and 5.8% in 2009. As for inflation, Fitch forecasts end-year CPI inflation at 9.2% this year, well above the official target of 5.5%.

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