S&P cuts Turkey growth forecast for next year

ISTANBUL - Reuters

Rating agency Standard & Poor’s on Oct. 7 marginally raised its forecast for Turkey’s economic growth this year to 3.1 percent from 3, but was more cautious for 2016, cutting its expectations to 2.8 percent from a previous 3.2.

“Turkey reported stronger GDP growth than we expected in the first half, with a surprising surge in private investment in the second quarter,” it said in a research note.

“External and domestic headwinds are intensifying, however, suggesting that this strong performance is unlikely to continue into the second half of the year.”

S&P said its forecasts assumed a gradual tightening of monetary policy, with the central bank raising its main interest rate to 8.5 percent by the end of 2016. The bank’s main one-week repo rate currently stands at 7.5 percent.

The rating agency said concern about China had made the external environment for emerging markets more challenging over the past two months, while political uncertainty within Turkey was further dampening investor sentiment.