Inflation in Turkey is estimated to decline to 15.5% this year and 12% next year, the global rating agency Fitch Ratings said on Thursday.
Interest rate is expected to be 17% at the end of 2021 and 13.5% at the end of 2022, according to a webinar titled “Fitch on Turkey: A Sovereign and Financial Institutions Overview”.
Fitch said it forecasts Turkey's gross domestic product (GDP) to increase 6.7% in 2021 and 4.7% in 2022.
'[Turkish] lira interest rates have risen quite significantly since the start of last year,' said Lindsey Liddell, senior director, head of Turkish Banks at Fitch Ratings.
'Foreign currency lending remains a significant portion of Turkish banks' loan books. It's currently around 36%,' she added.
Turkey's credit rating is supported by its moderate government and household debt, large and diversified economy, and favorable GDP per capita and trend growth, according to Fitch.
The global rating agency on Feb. 19 revised Turkey's outlook to stable from negative and affirmed its rating at BB-.
The agency, however, said Turkey's rating is constrained by weak finances, a track record of economic volatility, high inflation, increased dollarization, and financial risks.
By Ovunc Kutlu