Ratings agency Standard & Poor’s Global revised its outlook for Turkey to “negative” from “stable” on Friday, attributing this to risks arising from low interest rates, targeted lending and regulators’ control of foreign exchange positions and interest rates.
Türkiye suffers from high prices of goods and services. It is expected that the major earthquake that struck the country last month will lead to a continued rise in inflation in the period leading up to the presidential and parliamentary elections on May 14th.
On February 23, the Turkish Central Bank cut the main interest rate to 8.5 percent to mitigate the impact of the earthquake on the country’s economic situation.
“Given Turkey’s high current account deficit, limited usable reserves, high inflation and reliance on intermittent capital inflows, the outlook for the exchange rate remains, at best, uncertain,” the agency said in a statement.
The agency affirmed Turkey’s credit rating at “B”.
Last February, Turkey witnessed one of the worst natural disasters in its history, following a major earthquake hit several regions of the country, killing and injuring thousands.
The United Nations said this month that the damage caused by the devastating earthquake that struck Turkey and neighboring Syria in February, which resulted in thousands of deaths and injuries, would cost Turkey more than $100 billion in losses.
