ISTANBUL: Ratings agency Fitch cut its growth forecasts for Turkey, citing slower domestic lending growth and signs that consumer and investor confidence are moderating.

It now sees the economy expanding by 2.5 percent in 2014, compared with a previous estimate of 3.2 percent, and by 3.2 percent rather than 3.8 percent next year.

Turkey targets medium-term economic growth of 5 percent, which the central bank has said it expects to achieve by mid-2015 after shortfalls in 2012 and 2013.

On Friday, Fitch also affirmed Turkey’s credit rating at BBB- with a stable outlook, at the bottom of its investment-grade category.

A clear win in local elections on Sunday for the ruling AK Party has helped relieve political uncertainty after a bitter campaign, although Prime Minister Tayyip Erdogan’s vow to punish those responsible for damaging leaks could stoke tensions again.

Fitch said it expected political noise to remain an enduring feature of Turkey ahead of presidential elections in August and parliamentary elections in June 2015, periodically clouding the economic outlook.

Fitch said Turkey’s economy remained highly volatile, and expected the coherence and predictability of its macroeconomic policy to be weaker than in some emerging market peers.