Fitch Downgrade Turkey's Credit Rating to B+, Negative Outlook

LOCAL NEWS

• Fitch downgrades Turkey’s credit rating to B+ from BB-, adding a negative outlook.
  • Argues that the expansionary policy mix (including deeply negative real rates) could entrench inflation at high levels, increase exposure of public finances to FX depreciation & inflation, and eventually weigh on domestic confidence and reignite pressure on international reserves.
  • They note that the policy followed is not expected to reduce inflation or de-anchored expectations – Ahval
• Opposition leaders convened on Saturday to discuss strategies for a return to the parliamentary system should the ruling alliance lose power in June 2023.
  • The joint statement highlighted that Turkey was in its deepest political/economic crises due to the Presidential system
• Support for the Opposition alliance rises to 49.7% vs 42.1% for the ruling alliance in the latest Metropoll survey. This Survey also did not reflect the rise in electricity prices which is expected to further benefit the opposition alliance in next month’s polls – Ahval
• Cavusoglu reiterates statements against the West sowing panic in Ukraine, arguing that warnings of potential invasions “at any time” are detrimental for Ukraine’s economy and raise tensions with Russia