Fitch lowered on Friday the note of the Turkey, from “BBB-” to “BB+”, in the category of speculative (“junk”), holding that the political evolution of the country and security have undermined its economic performance and the independence of its institutions.
The rating agency added that the outlook attached to the sovereign rating of “BB+” rating of the country remains “stable”.
“Although the political environment is likely to stabilize, serious security problems are likely to persist,” she wrote in a press release.
The decision by Fitch comes a few hours after Standard & Poor’s to lower the outlook attached to the rating of Turkey from “stable” to “negative”, citing the difficulties of the government to counter inflationary pressures and stem the fall of the pound.
Fitch notes that the growth of turkey has sharply declined in the second half of 2016 and is expected to grow at a rate significantly lower than the recent performance of the country. The agency expects an annual growth of 2.3% on average between 2016 and 2018, compared to 7.1% in the five years that have ended in 2015.
The safety concerns, mean that tourism income will be significantly lower than those from 2013 to 2015, said Fitch, adding that inflation is expected to regain a double-digit rate in the first half of 2017.
The agency estimates the country’s debt at 27.8% of GDP at end-2016 and is expected to remain at this level until the end of 2018.
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