Moody's report on Türkiye

In a report published for Turkey, the credit rating agency Moody's stated that the recovery in institutional capacity in Turkey will take time even in a positive scenario. Moody's announced that it expects 2 more limited interest rate hikes from the TCMB before pausing interest rate hikes. The international credit rating agency Moody's published a 'Credit Opinion' report for Turkey. The report, which is shared only with subscribers, stated that "Our credit opinion reflects economic strength and moderate debt against the erosion in institutional and governance strength that will take time to recover even in a positive scenario." It was predicted that headline inflation in Turkey is still high and will continue to rise in the coming months. It was warned that a sharp slowdown in growth could increase the risk of a new policy change. The report stated that "The improvement in the current balance and increasing reserves are positive in terms of the credit outlook. If the tight monetary policy is sustainable and salary increases are in line with the TCMB's target, the credit outlook may be improved." The agency expects the Turkish economy to grow by 4 percent in 2023, 2.5 percent in 2024, and 3 percent in 2025. Average inflation is expected to be 53.5 percent this year, 58.9 percent in 2024, and 39.1 percent in 2025. The current account deficit-to-GDP ratio is also projected to be 4.7 percent this year, 3.4 percent in 2024, and 3 percent in 2025. ‘Limited’ interest rate hike expectation from TCMB Moody’s expects 2 more limited interest rate hikes from TCMB before pausing interest rate hikes. The report stated that if orthodox policies are short-term as in 2021, the credit outlook could be pulled to negative. Moody’s announced last Friday that no assessment had been made regarding Turkey’s credit rating. Moody's currently rates Turkey's credit rating at "B3" and its outlook as "stable".