By. Justin Mays
Fitch Ratings moved Turkey’s credit rating to ‘BB’ with a stable outlook. As recently as January Turkey was rated negative and has been moved up to stable in Q2 while continuing to improve in Q3. According to Daily Sabah Fitch said it expects inflation to ease to 16.9% by the end of the year due to a favorable base effect and slowing domestic demand. Fitch revised Turkey’s 2021 growth forecast to 7.9%, up 1.6% from its previous estimate in June. This is due to strong Q1 performance and resilient economic activity. Moreover, Fitch expects that the national deficit will decline to 3% of the GDP compared to compared to 5.2% in 2020 due to better outlooks in the tourism industry in the second half of 2021.
On August 12th the Central Bank's Monetary Policy Committee (TCMB-PPK) decided to keep the policy rate at 19 percent for the fifth time since March, keeping an orthodox approach to monetary policy instead of cutting interest rates. The TCMB-PPK, which was comparing data from the 0.05 difference between the Turkish Statistical Institution’s (TUIK) annual inflation rate of 18.95 percent in July and the TCMB's policy rate. The TCMB concluded that they should keep its policy to "pay interest above inflation." Currently Lira deposits have been steadily falling while foreign currency deposits are rising. TUIK will announce new inflation rates on September 3. The TCMB is reacting to global risks and foreign-exchange based data by keeping interest rates constant. Buying investment properties in Turkey is favorable for foreign direct investors at this current economic juncture.