Fitch praises Turkish economy’s ‘great resilience’

LONDON

Turkey executed a “very impressive” bounce back from the challenges it faced last summer, an expert from Fitch Ratings has said.

“Turkey has shown a very impressive resilience, flexibility, and recovered and stabilized from the financial crisis of last summer,” Ed Parker, Fitch Ratings’ managing director for the Europe, Middle East, and Africa EMEA region, told a global conference in London on Sept. 19.

Pointing to Turkey’s strong fundamentals, Parker said the country’s sovereign balance sheet, low government debt, and private banks are in relatively good shape.

He also praised the dynamism and flexibility of the Turkish private sector.

Parker also highlighted that the country posted a current account surplus instead of a deficit as well as a decline in inflation.

According to the latest Turkish Central Bank data, Turkey’s current account balance posted a $1.2 billion surplus this July, improving from a $2.2 billion deficit in July 2018.

In August, consumer prices in Turkey rose 15.01 percent on a yearly basis, versus annual inflation of 16.65 percent the previous month, according to the Turkish Statistics Institute (TÜİK).

“They have not had any difficulty getting the capital inflows that they need to finance that. There was a lot of doubt this time last year,” he said.

On the country’s economic outlook, Parker said there are still significant risks, and the recovery so far owes a great deal to fiscal stimulus and state banks.

Parker said the underlying general government deficit this year is projected to approach 4 percent of the GDP.

“We have also seen a deterioration in banks’ asset quality, particularly state-owned banks,” he said.

“There is still an adverse political shock, domestic, external, U.S. sanctions that are pending, spillover from Syria or from general unrest in the Middle East,” he added.

In an interview with state-run Anadolu Agency, Parker said that if the Turkish economy continues to move in that positive direction, the country’s rating outlook could be upgraded to stable.

In July this year, Fitch downgraded Turkey’s sovereign rating by one notch to “BB-” with a negative outlook.

He added that Fitch expects Turkey to grow around 3 percent in 2020 after contracting 0.5 percent this year.

The rating company would update its growth forecasts in the next issue of the Global Economic Outlook report to be released later this month.