Fitch says Turkey maintained fiscal discipline through elections, affirms credit rating

International credit rating agency Fitch has affirmed Turkey's long-term foreign and local currency Issuer Default Ratings (IDR) at 'BBB-' and 'BBB', respectively, at an investable level, leaving the outlook "stable".

Fitch said in the statement that the main drivers for the affirmation of Turkey's rating are the strong balance sheet of the government, fiscal discipline which was maintained through the elections and the commitment to it. The rating agency forecasted a general government primary surplus of 1.1% of GDP in 2015, unchanged from 2014.

The statement concluded that geopolitical tensions surrounding Turkey will not have a material impact on economic activity and the country's current account deficit will benefit from low oil prices.

However, Fitch said that there is significant uncertainty around the outcome of legislative elections set for Nov. 1, citing opinion polls that expected a similar result at the polls alongside the recent surge in terror attacks in the country as well as the ongoing conflict in Syria.

"Momentum in structural reform has slowed and prospects for revitalisation are uncertain," it added.

According to Fitch, notwithstanding the slow pace of reform, real GDP growth was 3.1 percent in first half of the year, driven by consumption. "The falling Turkish lira has pulled down consumer confidence, which hit its lowest level since March 2009 in August," the agency said.

The lira has lost around 30 percent of its value against the dollar since the end of January.

"External vulnerabilities remain a feature of Turkey's sovereign credit profile but have not weakened materially since our last review," it said.

Fitch expects the current account deficit to narrow to 4.6 percent of GDP in the year from 5.8 percent of GDP in 2014, driven by lower oil prices.