International rating agencies continue cutting their ratings on Turkey further into junk territory. Thus, S&P Global Ratings has downgraded Turkey’s sovereign credit rating to B from B+, noting that the outlook is stable. The unique policy championed by President Recep Tayyip Erdogan appears to have borne no fruit.
For the past few years, Turkey has been going through hard times, remaining firmly stuck in an economic trap lured by Erdogan. His reckless experiments in monetary policy did not have the desired effect either on the economy or on the national currency. As a result, the lira has every chance of ending the year as the world's worst-performing currency. All this has not gone unnoticed by global experts.
According to the global credit rating agency, weak monetary and fiscal policies as well as low net foreign exchange reserves have added to the Turkish currency’s volatility, thus undermining financial stability. The country’s rating reflects weak monetary policy credibility, S&P analysts note, warning of heightened risks associated with the upcoming election.
The agency predicts Turkey's economy will expand by 5.2% this year compared to 11.4% a year earlier. The inflation rate is expected to stand at 74%. Experts believe that the Turkish economy is likely to lose momentum next year in the face of a pickup in inflationary pressures holding back consumption and investment. Policy uncertainty will probably remain high ahead of the 2023 general election, with the risk of additional stimulus at the expense of economic stability, the agency added.
