Analysis on Turkey from S&P Global Ratings: Household Confidence in the Turkish Lira Remained Resilient

According to the analysis published by S&P Global Ratings regarding the Turkish economy, the resilient confidence of households in the Turkish lira and the decrease in foreign currency demand have enabled the Central Bank of the Republic of Turkey to partially rebuild its foreign exchange reserves.

In the analysis of the Turkish economy published by S&P Global Ratings, it was stated that households' confidence in the Turkish lira maintained its resilient course throughout the year, and as of September, the share of foreign currency deposits in total bank deposits remained at 38.7 percent, the same level as at the beginning of the year. While the reflections of the fund investigation that started in September and the liquidation of some investment funds remained limited, the CBRT's rapid provision of liquidity and regulatory measures prevented financial contagion. The redirection of fund outflows toward TRY deposits rather than foreign currency indicated that no widespread loss of confidence was experienced.

While it is estimated that the energy price shock following the war in the Middle East could exert upward pressure on inflation, inflation in Turkey is projected to average 30.9 percent this year and 21.7 percent in 2027. The agency's 'stable' outlook for Turkey is based on the assumptions that tight monetary and wage policies will be sustained and foreign exchange reserves will not be depleted. Turkey's economic growth is expected to materialize at 3 percent this year and rise to 3.7 percent in 2027. It is estimated that the budget deficit will approach 3 percent this year, and the ratio of public debt to GDP will remain below 30 percent.