Fitch to ‘closely follow’ post-election period

LONDON - Anadolu Agency

Fitch Ratings Senior Director Paul Rawkins said the rating agency will “closely follow” the steps of the ruling Justice and Development Party (AKP) after the upcoming general election, particularly whether the presidential system is still on the cards, when making assessments on the Turkish economy.

“There is a risk of local political tensions affecting economic policies in Turkey. Most concerns are about the post-election period. We’ll be closely following what the AKP does and whether there will be a change to a presidential system,” Rawkins said in an exclusive interview with Anadolu Agency on March 23.

Turkey will hold parliamentary elections on June 7.

Fitch affirmed Turkey’s long-term credit rating at BBB- late on March 20, leaving the outlook stable, and Rawkins said the current global economic environment is favorable to Turkey.

Banking sector still ‘robust’

Turkey is expected to grow by 3.2 percent this year, he predicted, adding that there was a “base effect” on the growth expectation for 2015 as last year’s growth turned out to be lower than predicted.

“As we upgraded Turkey’s rating in 2014, we made several projections about the economy. We can say Turkey has been on the right track to a large extent when we compare what we said and what the country has achieved since then,” he said.

“The banking sector is still robust. And Turkey’s growth outlook is still better than some other big emerging markets,” he added.

As Turkey is dependent on external capital inflows to support growth, lower oil prices are also a positive, Rawkins said.

“In this sense, the current external environment is very favorable as it is dominated by lower oil prices and ample global liquidity,” he said, adding that he believed that Turkish companies and institutions would retain market access at favorable rates with no indication of any sudden stop of capital inflow.

“Additionally, it is important for Turkey to maintain confidence for the continuation of the inflow of foreign funds to the country and the keeping the current account gap at lower levels,” Rawkins said.

The recent volatility of the Turkish Lira did not figure significantly in Fitch’s analysis. “Turkey is already a volatile place,” Rawkins stated, adding that the agency “looks at policy, not exchange rates.”