International rating agency Fitch (Credits: AFP)

International rating agency Fitch downgraded Turkey's credit rating from B+ to B and predicted an increase in the country's annual inflation to an average of 71.4% in 2022, media reported on Saturday.

According to Fitch, Turkey is facing risks of increasing reverse indexation and additional devaluation of the Turkish lira, TRT Haber reported.

The rating agency added that it expects annual inflation in Turkey to rise to an average of 71.4% in 2022 and that this figure will drop to 57% in 2023.

Turkey has been facing an economic downfall since 2021, with consumer inflation skyrocketing and the Turkish lira experiencing unprecedented volatility.

The Turkish government attempted to regulate the crisis by cutting the interest rate, but the situation reached a relative equilibrium only last December when the Turkish Central Bank fixed the interest rate at 14%.

In recent months, the Turkish economy has encountered another set of challenges stemming from a geopolitical crisis unfolding in Europe, which has already driven global inflation and fuel prices to record high, affecting the Turkish inflation rate as well, the Turkish Central Bank explained.

As a result, the annual inflation in the country accelerated to 36%, while the lira continued to depreciate, reaching a new low of 17 liras per US dollar from 13.5 in January.