Fitch downgrades Turkey’s debt rating to B

Fitch downgraded Turkey’s debt rating to ‘B’ from B+, and affirmed its ratings outlook at "negative", the rating agency said in a statement on Friday.

Increasing inflation, widening current account deficit and interventionist policies were the main concerns about the Turkish economy, Reuters cited from the agency’s report.

Annual inflation in Turkey jumped to a 78.6% in June amid Turkish lira’s continuous decline leaving the masses with a decrease in purchasing power.

“Turkey’s trajectory remains highly uncertain due to increased risks of backward indexation, rising expectations and additional lira depreciation, as the exchange rate pass-through has increased in both speed and magnitude,” Fitch said. 

The agency forecast annual inflation to average 71.4% this year, the highest among sovereigns rated by the agency, adding that the inflation is set to slow to 57% in 2023, as it expects the overall policy mix to remain overly accommodative at least until the 2023 elections.