Video|25 July 2024

MENA – Turkey’s creditworthiness improves on the back of a tight monetary policy

John Payne

Senior Economist, EMEA Macro Consulting

Turkey has received its third credit rating upgrade this year, as Moody’s revised its rating to “B1” from “B3”, following Fitch’s and S&P’s upgrades earlier this year. Moody’s upgrade for Turkey marks its first in over a decade. The two-notch upgrade was driven by the implementation of appropriate macroeconomic stabilization policies. Yesterday, Turkey’s central bank has left its benchmark interest rate unchanged at 50%. We expect the central bank to maintain its policy rates at the current level until 2025 Q1.

Elsewhere, inflation rates continue to ease broadly across the GCC region, reflected by the incoming inflation data. Kuwait’s annual inflation rate eased by 0.3 p.p. to 2.8%, marking its lowest reading since December 2020. The ease was mainly driven by slowdown in the price of food & beverages and housing & utilities. We expect Kuwait’s inflation to average 2.9% in 2024.

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