S&P's remarkable analysis of Türkiye after the fund crisis: Inflation and growth forecasts have been announced

S&P Global Ratings reported that the process that led to the liquidation of approximately 18 billion dollars of funds in Turkey did not trigger a widespread loss of confidence in the Turkish Lira.

According to the evaluation of the institution, most of the resources coming out of the funds were transferred to bank deposits in Turkish Lira instead of turning to foreign currency.

Evaluating the effects on the markets of the fund investigation that started in September and the liquidation of some investment funds, S&P stated that compulsory asset sales caused a sharp correction in the stock market.

On the other hand, it was stated that the rapid provision of liquidity by the Central Bank of the Republic of Turkey (CBRT) and the discriminatory measures implemented in the regulatory framework prevented a wider-scale contagion in the financial system.

THE SHARE OF FOREIGN EXCHANGE DEPOSITS HAS NOT CHANGED

According to S&P's analysis, the fact that households maintained their confidence in the Turkish Lira and that the demand for foreign exchange remained limited allowed the CBRT to partially rebuild its foreign exchange reserves.

As of September, the share of foreign currency deposits in total bank deposits was 38.7 percent.

This rate remained the same as at the beginning of the year.

ENERGY PRICES CREATE A RISK ON INFLATION

S&P predicted that the rise in energy prices following the war in West Asia could put upward pressure on inflation in Turkey.

The institution expects annual average inflation to be 30.9 percent in 2026 and 21.7 percent in 2027.

It was stated that Turkey's credit rating outlook is "stable" based on the assumption that tight monetary policy and wage setting policies will be maintained and foreign exchange reserves will not be consumed further.

S&P evaluated that if these conditions are maintained, the Turkish economy can manage the current shock in energy prices.

2026 GROWTH FORECAST HAS BEEN REDUCED DOWN

S&P reported that the Turkish economy will grow by 3.7 percent in 2025, and that it expects growth to decrease to 3 percent in 2026.

The institution reduced its 2026 growth forecast by 0.4 points compared to its previous forecast due to the economic effects of the war in West Asia.

It was estimated that growth would accelerate again in 2027 and reach 3.7 percent.

BUDGET DEFICIT IS EXPECTED TO APPROACH 3 PERCENT

According to S&P's estimates, the budget deficit, which was 2.6 percent of the gross domestic product in 2025, is expected to expand to a limited extent and approach 3 percent in 2026.

It is estimated that the ratio of public debt to gross domestic product will remain below 30 percent.

Türkiye'S CREDIT RATING 'BB-/B'

In its last assessment in April, S&P Global Ratings confirmed Turkey's credit rating as "BB-/B" and maintained its credit rating outlook at "stable" level.

The institution did not publish its assessment of Türkiye, which was expected to be made on October 16.