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"A statement just released by Standard & Poor's said that the outlook for Turkey remained positive and that it had affirmed the Republic of Turkey's ‘BB/B’ foreign currency sovereign credit ratings. The reason for this rating was the strong GDP growth of just under 9% in 2010, even though it's estimated that the current account deficit has widened to 6.6% of GDP in 2010, compared to just 2.3% in 2009.
The current account deficit maintained an average of less than 5% between 2003 and 2008. Turkey is still struggling from weak external competitiveness and a low level of prosperity, and it has large gross external financing needs which present a small amount of risk as a change in investor outlook could affect economic growth.
In general the report from Standard & Poor was extremely positive and it views Turkish institutions as being well-placed to cope with any reversal in capital inflows. It also considered the Turkish banking system to be well regulated in spite of the rapid acceleration in credit growth during last year. Good regulation helped Turkey maintain access to global financial markets from 2008 to 2010 much more successfully than comparable countries banking systems.
Standard & Poor thinks that policy-making will continue to ensure that general government debt to GDP declines and anticipates that GDP growth will average at just under 5% between now and 2013. It also expects the underlying fiscal position to tighten up after the general elections in a few weeks’ time. The 2011 budget deficit is expected to narrow to about 2.8% of GDP from 3.7% of GDP in 2010 it due to good domestic demand.
