S&P increases Turkey’s credit rating
International credit rating agency Standard & Poor's (S&P) has increased Turkey's long-term local currency ratings to BB- from B+. In addition, the B+ long-term foreign currency ratings and the B short-term foreign and local currency ratings of Turkey were affirmed. Economic outlook was also revised to positive from stable. S&P analyst expressed that the improvement in Turkey's creditworthiness reflects the progress that the government is making on both the economic and political fronts toward restoring durable macroeconomic stability. In line with the statement, real GDP (Gross Domestic Product) growth is reported to be close to the target of 5% in 2003 and 2004. S&P also stated that the inflation rate in consumer prices has decreased markedly and could decline to 12% by year-end 2004. Moreover, current accounts deficit is expected to widen of about 2.5-2.75% of GDP in 2003 and 2004, however it is stated that the exchange rate flexibility and $34 billion international reserves could prevent the risk of another crisis. High public sector debt, limited fiscal flexibility and high real interest rates were listed as risks in the economy.