Downgrading Turkey’s note ‘would be wrong’

ISTANBUL

Şimşek says Turkey remains resilient to external shocks. AA Photo

The reassessment of Turkey’s credit rating would be fair in light of the country's economic resilience against many challenging factors, Finance Minister Mehmet Şimşek has said, ahead of a critical upcoming announcement from Fitch.

Speaking in a TV interview, Şimşek said the "whole picture" suggests that Fitch should keep Turkey’s sovereign rating on hold, adding that the country is still growing in a "moderate, but more sustainable pace" despite challenges arising from geopolitical tension and fragile economic recovery in Europe.

“Let’s look at the whole picture. We have political stability and fiscal discipline. Turkey’s debt level is low, the current account deficit is low and keeps shrinking, inflation is almost at its peak [with no way to go further] and growth ticks are at a reasonable and sustainable level,” he said.

“When you look at the entire picture, it would be mistake to downgrade Turkey’s credit rating because of the possibility of an interest rate hike from the U.S. Federal Reserve or an increase in geopolitical tension in the region,” he added.   

Tough conditions

Turkey’s largest export market, the EU, has shown a much slower performance than anticipated, Şimşek stated, also underlining the economic effects of the crisis in Iraq, Turkey's second largest export market. Considering these challenges, Şimşek predicted a 2014 growth performance of between 3 to 3.5 percent.

Markets have set their sights on Fitch’s announcement for Turkey’s credit rating, which is due on Oct. 3, as Turkey faces challenges with increasing tension in Iraq after the U.S. and allies began airstrikes on ISIL-held sites and with the anticipation of intensified interest rate hikes from the U.S. Federal Reserve.