S&P Global Ratings has upgraded Turkey's credit rating outlook, citing the government's strategy of taking a more rebalanced approach that is expected to generate confidence in its economy.
The country's long-term rating was raised one notch up to “B+” from “B”, with a positive outlook, the New York-based ratings agency said on Friday.
A “B+” rating, which is “highly speculative”, is four levels below investment grade, according to S&P's ratings scale. Non-investment grade makes it more difficult for a country to access capital markets and raise funding that it needs when it wants to borrow.
S&P expects Ankara will take measures to streamline fiscal, monetary and incomes policies, which would include cuts to current non-wage expenditures in 2024.
Also, in the aftermath of the devastating earthquake that hit Turkey and neighbouring Syria, any spending related to the natural disaster may take longer to execute, it said.
“Details of a larger, more-detailed fiscal and incomes policy plan are limited. We believe the emphasis will be on gradual changes, rather than a front-loaded economic programme,” S&P said.
“Nevertheless, we think that the economy is already rebalancing, with net exports already adding to rather than subtracting from growth and that credit conditions are tight. We also believe a stable nominal exchange rate will promote the de-dollarisation of private and public balance sheets.”
S&P's decision follows local elections in Turkey, in which President Recep Tayyip Erdogan's party suffered a surprise and heavy defeat.
A return to a more orthodox policy has led S&P to “believe the co-ordination between monetary, fiscal, and incomes policy is set to improve, amid external rebalancing”.
“We forecast rising portfolio inflows and narrowing current account deficits over the next two years, alongside declining inflation and dollarisation, although progress will be slow and reserve accumulation modest as the central bank limits depreciation of the Turkish lira,” S&P said.
In an alternative scenario of a harder economic landing, “fiscal outcomes would be worse and balance-of-payments trends would be better”, it added.
Turkey is facing chronic inflation following years of Mr Erdogan's unorthodox policies. He installed a new economic team to stabilise the economy and control consumer prices last year.
The country's central bank said in December that it expects inflation to rise to as high as 75 per cent in May, before dipping to about 36 per cent by the end of this year.
The Turkish lira is also among the worst performers among emerging market currencies tracked by Bloomberg. It is down nearly 9.5 per cent so far in 2024.
On March 21, Turkey’s central bank delivered a surprise interest rate rise, increasing its benchmark rate to 50 per cent from 45 per cent, tightening the monetary policy further as the regulator fights to curb inflation that rose to 70 per cent in last year.
S&P expects the Turkey's central bank to keep its benchmark rate at 50 per cent for the rest of 2024 and be vigilant against depreciation pressures on lira as a means of tempering demand and minimising the effects of the exchange rate into inflation.
Political stability would also be a factor; with no scheduled national elections until 2028, the country's policymakers “have space to implement policies to compress demand and inflation, using all available wage-setting, fiscal and monetary tools”, it said.
“Whether and how quickly authorities tackle the inflation problem will affect economic stability, public finances and hence our sovereign rating on Turkey. Public-sector wages and pensions remain indexed to past inflation, which will make it much tougher to tame inflation quickly.”
Turkey has also stopped all trade with Israel until the latter allows humanitarian aid to flow uninterrupted into Gaza.
The decision expands on a move announced in April to restrict some Turkish exports to Israel due to the “worsening humanitarian tragedy in Palestine”, Turkey's Trade Ministry said on Thursday.
The Birkin bag is made by Hermès.
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.
Sukuk explained
Sukuk are Sharia-compliant financial certificates issued by governments, corporates and other entities. While as an asset class they resemble conventional bonds, there are some significant differences. As interest is prohibited under Sharia, sukuk must contain an underlying transaction, for example a leaseback agreement, and the income that is paid to investors is generated by the underlying asset. Investors must also be prepared to share in both the profits and losses of an enterprise. Nevertheless, sukuk are similar to conventional bonds in that they provide regular payments, and are considered less risky than equities. Most investors would not buy sukuk directly due to high minimum subscriptions, but invest via funds.
The specs
Engine: 3.9-litre twin-turbo V8
Transmission: seven-speed
Power: 720hp
Torque: 770Nm
Price: Dh1,100,000
On sale: now
Empty Words
By Mario Levrero
(Coffee House Press)
Sweet%20Tooth
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World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
Getting there
Flydubai flies direct from Dubai to Tbilisi from Dh1,025 return including taxes
The biog
Name: Dhabia Khalifa AlQubaisi
Age: 23
How she spends spare time: Playing with cats at the clinic and feeding them
Inspiration: My father. He’s a hard working man who has been through a lot to provide us with everything we need
Favourite book: Attitude, emotions and the psychology of cats by Dr Nicholes Dodman
Favourit film: 101 Dalmatians - it remind me of my childhood and began my love of dogs
Word of advice: By being patient, good things will come and by staying positive you’ll have the will to continue to love what you're doing
Recipe
Garlicky shrimp in olive oil
Gambas Al Ajillo
Preparation time: 5 to 10 minutes
Cooking time: 5 minutes
Serves 4
Ingredients
180ml extra virgin olive oil; 4 to 5 large cloves of garlic, minced or pureed (or 3 to 4 garlic scapes, roughly chopped); 1 or 2 small hot red chillies, dried (or ¼ teaspoon dried red chilli flakes); 400g raw prawns, deveined, heads removed and tails left intact; a generous splash of sweet chilli vinegar; sea salt flakes for seasoning; a small handful of fresh flat-leaf parsley, roughly chopped
Method
▶ Heat the oil in a terracotta dish or frying pan. Once the oil is sizzling hot, add the garlic and chilli, stirring continuously for about 10 seconds until golden and aromatic.
▶ Add a splash of sweet chilli vinegar and as it vigorously simmers, releasing perfumed aromas, add the prawns and cook, stirring a few times.
▶ Once the prawns turn pink, after 1 or 2 minutes of cooking, remove from the heat and season with sea salt flakes.
▶ Once the prawns are cool enough to eat, scatter with parsley and serve with small forks or toothpicks as the perfect sharing starter. Finish off with crusty bread to soak up all that flavour-infused olive oil.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
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Dubai Hurricanes 58-10 Dubai Knights Eagles
Dubai Tigers 5-39 Bahrain
Jebel Ali Dragons 16-56 Abu Dhabi Harlequins
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Top 10 most polluted cities
- Bhiwadi, India
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- Bahawalpur, Pakistan
- Peshawar, Pakistan
- Bagpat, India
Super Rugby play-offs
Quarter-finals
- Hurricanes 35, ACT 16
- Crusaders 17, Highlanders 0
- Lions 23, Sharks 21
- Chiefs 17, Stormers 11
Semi-finals
Saturday, July 29
- Crusaders v Chiefs, 12.35pm (UAE)
- Lions v Hurricanes, 4.30pm