Fitch: Turkey will reduce inflation rates in 2021 and 2022

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The international credit rating agency, Fitch Ratings, announced that it expects Turkey’s inflation rate to drop at the end of 2021 to 11%. In addition, it expects it to decline to 9.2% by the end of 2022.

This was stated in the “Turkey and Financial Institutions” webinar held by the international credit rating agency Fitch Ratings.

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Speaking at the symposium, Winslow, director of the rating agency, said:

“This year, we expect the inflation rate in Turkey to reach 11 percent, and we expect the decline to be 9.2 percent by the end of 2022.

As the Central Bank of Turkey (CBT) remains above estimate.

Winslow also said, in his evaluation of the steps of Turkish monetary policy, “The new interest rates rose to positive territory by 1.4 percent in February, taking into account the rate of inflation. And that was at the level of -5 percent in June.

Winslow also said that the strong credit stimulus, which increases external imbalances, is expected to decrease.

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“Supports our general guess.”

Winslow talked on the financial standards of Turkey, saying: “By comparing Turkey’s GDP with the level of public debt of 40 percent, we notice a reliable financial anchor.”

Winslow also mentioned that the ratio of public debt to GDP for other countries that the credit rating agency has rated “BB” is around 60 per cent.

Winslow noted that the budget deficit of 4.5 percent in 2020 supports our overall projection for 2022, dropping the deficit to 3.9 percent.

“Given the rather strong growth prospects, we do not expect a sharp increase in non-performing loan ratios to banks in 2021,” said Lindsay Liddell, Director of Financial Institutions at Fitch Ratings in Europe, the Middle East and Africa.

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Statements by an analyst for Turkey’s credit rating Fitch

On February 19, Fitch Ratings raised Turkey’s credit rating to “BB-“, while confirming that the outlook for the credit rating has shifted to “negative” from “stable”.

Fitch Ratings’ senior director and Turkish analyst, Eric Areby, said in a statement on February 23: The credit rating outlook for Turkey, with the presence of a new economic team, reflects the return of a more consistent monetary policy.

This development has reduced the risks of short-term external financing.

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