The U.S.-based credit rating agency Standard & Poor's (S&P) on Friday affirmed Turkey's foreign and local currency ratings while maintaining its 'negative' outlook on he banking industry.

The agency affirmed the country's foreign currency rating as 'BB/B' and local currency sovereign rating as 'BB+/B', saying that Turkey's flexible exchange rate regime will help the economy adjust to external shocks.

The government's low debt burden and the expectation of modest accumulation of further liabilities on the government's balance sheet were main drivers for the ratings, it said.

It also said the inflation will be moderate over the forecast horizon through the end of 2020 and the real GDP growth rate forecast will average 3 percent over 2017-2020.

According to the S&P, the negative outlook reflects weak growth and exchange rate volatility could lead to fiscal deterioration beyond current projections.