Fitch maintains stable outlook for Turkey

Credit agency Fitch Ratings maintained Turkey's investment-grade credit rating and stable outlook in a statement released yesterday. "Turkey's sovereign credit profile continues to mix high exposure to global financial market conditions and other structural weaknesses with strong public finances and a record of resilience to recent external shocks," the statement said. "This is reflected in the stable outlook on Turkey's BBB-rating, which we affirmed last month."

The credit agency noted Turkey's low government debt to GDP ratio as a key reason for the rating. That ratio is forecasted at 35.3 percent in 2015, below the BBB median (42.7 percent), and is expected to fall over the next two years while the median rises.

"Commitment to fiscal discipline appears to receive broad political support even at a time of heightened political uncertainty," the statement said. "The interim government's latest medium-term plan, announced last week, sees spending rise slightly but the central government continuing to run primary surpluses."

However, large external financing requirements that expose Turkey to shifting investor sentiment remain a potential source of risk. The report said the external balance sheet had been strengthened and forecast the current account deficit to narrow to 4.6 percent of GDP this year from 5.8 percent in 2014. This was largely due to lower oil prices rather than any gains in competitiveness or domestic savings. A stable government after the Nov. 1 general election is likely to benefit structural reform and growth, Fitch added.