Declining uncertainty over politics positive on Turkey’s ratings, says JCR

ISTANBUL

The Japan Credit Rating Agency (JCR) has said that “declining uncertainty” on Turkey’s domestic politics will be a positive for the country’s credit ratings in a note after the June 24 elections.

However, in its note released on June 26, the agency warned about the ineffectiveness of measures to fight the high inflation rate and the current account deficit.

According to the Supreme Election Council (YSK), on June 24, Recep Tayyip Erdoğan won a majority in the presidential election with 52.5 percent of the vote, while his closest rival followed on 30.6 percent, with 99.9 percent of ballot boxes opened.

In the parliamentary polls, the “People’s Alliance” of the Nationalist Movement Party (MHP) and the Justice and Development (AKP) won 53.6 percent of the vote, with 99.9 percent of ballot boxes opened.

“JCR sees that resultant declining uncertainty over domestic politics would be positive for the ratings,” read the statement.

“On the other hand, JCR holds that the major ongoing macroeconomic statistics such as the inflation rate and the current account deficit indicate that measures to correct macroeconomic imbalances as proposed in the former Erdoğan administration’s Medium-Term Program (MTP) at the end of September 2017 have not fully proceeded as planned,” it added.

JCR concluded that it will keep watching whether the new Erdoğan administration will focus on structural reforms aimed for the correction of macroeconomic imbalances and whether it will achieve the targets set forth in the MTP.

JCR keeps Turkey’s rating at “BBB-“ with a stable outlook, it added.