Fitch: Turkeys soft landing on track, ratings may be upgraded.

By bne IntelliNews August 24, 2012
Fitch said that the Turkish economy was making solid progress in returning to a sustainable growth rate while narrowing the current account deficit and reducing inflation. Further progress in navigating a path back to sustainable growth, with inflation falling toward its target and the CA deficit narrowing to a more sustainable level could lead Fitch to upgrade Turkeys long-term IDRs to BBB- from BB+, the rating agency added. Fitch forecasts GDP growth of 2.8% in 2012 and 4.5% in 2013 while its CA deficit forecasts are USD 60bn (7.5% of GDP) in 2012 and USD 59bn (6.6% of GDP) in 2013. The rating agency expects Turkey to avoid a formal recession as strong export growth is helping offset a more abrupt slowdown in domestic demand. Fitch forecasts 12-month inflation to decline to 6.4% in December. Despite the good progress towards a soft landing, the CA deficit and external financing needs are large, leaving Turkey vulnerable to sudden stop in international capital inflows, Fitch said.

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