Inflationary Pressure: Turkey’s credit rating downgraded

PARIS: The Standard and Poor’s agency on Friday downgraded Turkey’s credit rating to “negative” from “stable” because of a slump of the lira while Fitch cut its sovereign debt to junk. The national currency has dropped 18% against the dollar since Standard and Poor’s latest review of Turkey in November, raising inflationary pressures, endangering corporate balance sheets and hurting economic growth, S and P said. The agency’s actual ratings for Turkey remained intact, but the outlook change indicates that any future move is now more likely to be downwards than upwards. “We are revising our outlook to negative to reflect what we consider to be rising constraints on policy makers’ ability to tame inflationary and currency pressures, which could weaken the financial strength of Turkey’s companies and banks, undermining growth, and fiscal outcomes, during a period of rising global interest rates,” it said in a statement.

Published in The Express Tribune, January 29^th, 2017.

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