S&P Global has upgraded Turkey's credit rating for the second time this year, citing the impact of the government's tight monetary stance that has helped stabilise the nation's economy.
The country's long-term sovereign credit rating was raised to BB- from B+, though its outlook was revised to stable from positive, New York-based S&P said on Friday.
A BB- rating, which is “non-investment grade speculative”, is three levels below investment grade, according to the ratings scale of S&P. Non-investment grade makes it more difficult for a country to get access to capital markets and raise funding when it wants to borrow.
The so-called Big Three ratings agencies have been optimistic about Turkey this year. S&P first boosted its credit rating in May on a “rebalanced economic strategy”, and Friday's action matches the two upgrades Fitch Ratings has given Turkey in 2024. Moody's Investors Service also upgraded the country in July, its first such move in a decade, citing improved governance.
The Central Bank of Turkey's conservative monetary stance has “enabled authorities to stabilise the lira, bring down inflation, rebuild reserves and de-dollarise the financial system”, analysts at S&P wrote.
“Turkey's savings gap with the rest of the world has narrowed, which is visible in the approximately 4 percentage points of gross domestic product decline in the current account deficit since 2022,” they said.
Bringing inflation down further, however, would still potentially be challenging, S&P said, as domestic credit growth is not keeping up with inflation and private investment remains stagnant.
Turkey has been battling chronic inflation in 2024, though Ankara's disinflation strategy lowered it to just a shade below 50 per cent in September, after peaking at more than 75 per cent in May, data from the Turkish Statistical Institute, or Turkstat, has shown.
The adjusted outlook reflects balanced risks over the next 12 months “to authorities' ambitious plans to bring down still elevated inflation, manage workers' wage expectations and rebalance the Turkish economy”, said S&P.
The country has been raising interest rates since last year to bring down inflation after it abandoned President Recep Tayyip Erdogan’s unorthodox policy of keeping interest rates low to spur growth.
He installed an economic team and appointed former New York Federal Reserve economist Fatih Karahan to help stabilise the economy and control consumer prices.
The central bank has a more optimistic view in the longer term. In August, it kept its inflation outlook unchanged, projecting 38 per cent by the end of the year and 14 per cent in 2025, before falling further to 9 per cent by the end of 2026.
Turkey's economy, on the other hand, has been stagnating, dropping to 2.5 per cent growth in the second quarter of 2024, after expanding 4.6 per cent a year earlier and 5.3 per cent in the fourth quarter of 2023, Turkstat said.
The Turkish lira remains one of the worst performers among emerging market currencies tracked by Bloomberg. It is down nearly 15 per cent so far in 2024.
S&P said it could raise Turkey's ratings should there be further progress on bringing inflation down closer to single-digit levels and restoring long-term confidence in the lira. However, lower ratings would be declared if pressures on Turkey's financial stability or wider public finances were to intensify.
“Evidence of [bringing down inflation] would include further de-dollarisation of the share of foreign currency deposits in the Turkish banking system, and increased liquidity and depth of domestic capital markets, particularly for foreign exchange operations,” it said.
In addition, with no elections scheduled before the end of March 2028, Turkey's policymakers would have the opportunity to implement policies to compress demand and inflation, through gradual fiscal and incomes policy tightening, the S&P analysts said.
“Stubbornly high services inflation, particularly in Turkey's three largest metropolitan areas … may, over the course of the next two years, increase pressure on Turkey's parliament to introduce measures to shield households against the rising cost of living,” they said.
Turkey has also been helped by its removal from the Financial Action Task Force's “grey list” of countries that face tighter monitoring for money laundering and terrorism financing in June, as the nation had made “significant progress” in its fight against illicit actions in the sector.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
The team
Videographer: Jear Velasquez
Photography: Romeo Perez
Fashion director: Sarah Maisey
Make-up: Gulum Erzincan at Art Factory
Models: Meti and Clinton at MMG
Video assistant: Zanong Maget
Social media: Fatima Al Mahmoud
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BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
The biog
Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Barbie
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India team for Sri Lanka series
Test squad: Rohit Sharma (captain), Priyank Panchal, Mayank Agarwal, Virat Kohli, Shreyas Iyer, Hanuma Vihari, Shubhman Gill, Rishabh Pant (wk), KS Bharath (wk), Ravindra Jadeja, Jayant Yadav, Ravichandran Ashwin, Kuldeep Yadav, Sourabh Kumar, Mohammed Siraj, Umesh Yadav, Mohammed Shami, Jasprit Bumrah.
T20 squad: Rohit Sharma (captain), Ruturaj Gaikwad, Shreyas Iyer, Surya Kumar Yadav, Sanju Samson, Ishan Kishan (wk), Venkatesh Iyer, Deepak Chahar, Deepak Hooda, Ravindra Jadeja, Yuzvendra Chahal, Ravi Bishnoi, Kuldeep Yadav, Mohammed Siraj, Bhuvneshwar Kumar, Harshal Patel, Jasprit Bumrah, Avesh Khan
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
THE%20SPECS
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In The Heights
Directed by: Jon M. Chu
Stars: Anthony Ramos, Lin-Manual Miranda
Rating: ****
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
The biog
Favourite films: Casablanca and Lawrence of Arabia
Favourite books: Start with Why by Simon Sinek and Good to be Great by Jim Collins
Favourite dish: Grilled fish
Inspiration: Sheikh Zayed's visionary leadership taught me to embrace new challenges.
FROM%20THE%20ASHES
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What is Diwali?
The Hindu festival is at once a celebration of the autumn harvest and the triumph of good over evil, as outlined in the Ramayana.
According to the Sanskrit epic, penned by the sage Valmiki, Diwali marks the time that the exiled king Rama – a mortal with superhuman powers – returned home to the city of Ayodhya with his wife Sita and brother Lakshman, after vanquishing the 10-headed demon Ravana and conquering his kingdom of Lanka. The people of Ayodhya are believed to have lit thousands of earthen lamps to illuminate the city and to guide the royal family home.
In its current iteration, Diwali is celebrated with a puja to welcome the goodness of prosperity Lakshmi (an incarnation of Sita) into the home, which is decorated with diyas (oil lamps) or fairy lights and rangoli designs with coloured powder. Fireworks light up the sky in some parts of the word, and sweetmeats are made (or bought) by most households. It is customary to get new clothes stitched, and visit friends and family to exchange gifts and greetings.
The specs: 2018 Nissan Altima
Price, base / as tested: Dh78,000 / Dh97,650
Engine: 2.5-litre in-line four-cylinder
Power: 182hp @ 6,000rpm
Torque: 244Nm @ 4,000rpm
Transmission: Continuously variable tranmission
Fuel consumption, combined: 7.6L / 100km
