Fitch Downgrades Turkey Rating Outlook

Fitch ratings agency said Wednesday that it was cutting the outlook on Turkey from 'positive' to 'stable' given a recent increase in risks and affirmed the country's rating at BB+.

"The revision of the Outlook to Stable reflects an increase in near-term risks to macroeconomic stability," said Ed Parker, managing director in the EMEA Sovereign group at Fitch.

Turkey faces the challenge of reducing its large current account deficit and above-target inflation rate against the background of deterioration in the global economic and financing environment, he added in a statement.

"Nonetheless, the ratings are supported by favorable government debt dynamics, a healthy potential growth rate and a strong banking sector," said Parker.

"If Turkey attains a 'soft landing' and near-term macro-financial risks recede, then upward rating dynamics could resume," he added.

Turkey, a candidate for European Union membership and which is vying to take on a bigger role in the Middle East, emerged from recession nearly a decade ago with aid from the International Monetary Fund in return for deep structural reforms.

The recent global economic crisis caused the Turkish economy to slump by 4.7 percent in 2009 but it grew 8.9 percent last year.