Kuwaiti Girl
SENIOR MEMBER
- Joined
- May 8, 2016
- Messages
- 2,287
- Reaction score
- 0
- Country
- Location
Turkey Outlook Cut to Negative by Moody's on Political Woes
https://www.bloomberg.com/news/arti...t-to-negative-by-moody-s-on-political-tension
Moody’s reduced the outlook to negative from stable and kept its rating one notch below investment grade at Ba1, on par with Russia, according to a statement Friday. Fitch Ratings ranks the nation at the same level.
"The impact of ongoing political and geopolitical tensions on domestic confidence, and the heightened external pressures that led to a steep depreciation of the lira and high inflation, will suppress growth in the near-term relative to expectations last year," Moody’s said in the statement.
The lira dropped 0.3 percent to 3.6365 per dollar at 5 p.m. in New York, erasing gains.
The ratings agency cited the continuing erosion of Turkey’s institutional strength and weaker growth outlook as reasons for its change.
Political developments affecting the economy include government-backed purges against alleged members of a group blamed for last year’s failed coup attempt. Moody’s said a referendum on April 16 to change the constitution to give President Recep Tayyip Erdogan more powers is unlikely to erase divisions between the ruling AK Party and the opposition. Steps taken to reduce various forms of opposition since the coup attempt have undermined the country’s administrative capacity and damaged private sector confidence, it said.
April Referendum
Erdogan is seeking to transform the mostly ceremonial post of president into the official nexus of political power, with Turks voting in the referendum on the shift. While critics accuse the president of trying to create a one-man rule, Erdogan and the government claim the changes will help to foster growth.
Turkey’s economy contracted 1.8 percent in the third quarter and recorded only “so so” growth in the fourth, Deputy Prime Minister Mehmet Simsek said in January, as the political fallout from July’s failed coup weighed on sentiment. The government said the July actions were orchestrated by U.S.-based cleric Fethullah Gulen, and responded by purging more than 100,000 alleged followers of the preacher from their jobs in the military, judiciary and other state institutions.
Turkey lost its last investment grade rating in January when Fitch cut its sovereign debt to junk. Moody’s downgrade adds to the country’s troubles as it relies on short-term capital flows, foreign borrowing, tourism revenues as well as foreign direct investment to finance its current-account deficit.
According to Moody’s, weaker growth is also hurting Turkey’s key credit anchor -- its healthy public finances and low government debt.
Following Moody’s announcement, Bulent Gedikli, a senior adviser to Erdogan, criticized the report on his Twitter account and said, “Moody’s has done a night operation again and announced a report based on virtual fears and non-existing risks.”
https://www.bloomberg.com/news/arti...t-to-negative-by-moody-s-on-political-tension
- Keeps issuer rating at one notch below investment grade
- Moody’s says Turkey has experienced further growth slowdown
Moody’s reduced the outlook to negative from stable and kept its rating one notch below investment grade at Ba1, on par with Russia, according to a statement Friday. Fitch Ratings ranks the nation at the same level.
"The impact of ongoing political and geopolitical tensions on domestic confidence, and the heightened external pressures that led to a steep depreciation of the lira and high inflation, will suppress growth in the near-term relative to expectations last year," Moody’s said in the statement.
The lira dropped 0.3 percent to 3.6365 per dollar at 5 p.m. in New York, erasing gains.
The ratings agency cited the continuing erosion of Turkey’s institutional strength and weaker growth outlook as reasons for its change.
Political developments affecting the economy include government-backed purges against alleged members of a group blamed for last year’s failed coup attempt. Moody’s said a referendum on April 16 to change the constitution to give President Recep Tayyip Erdogan more powers is unlikely to erase divisions between the ruling AK Party and the opposition. Steps taken to reduce various forms of opposition since the coup attempt have undermined the country’s administrative capacity and damaged private sector confidence, it said.
April Referendum
Erdogan is seeking to transform the mostly ceremonial post of president into the official nexus of political power, with Turks voting in the referendum on the shift. While critics accuse the president of trying to create a one-man rule, Erdogan and the government claim the changes will help to foster growth.
Turkey’s economy contracted 1.8 percent in the third quarter and recorded only “so so” growth in the fourth, Deputy Prime Minister Mehmet Simsek said in January, as the political fallout from July’s failed coup weighed on sentiment. The government said the July actions were orchestrated by U.S.-based cleric Fethullah Gulen, and responded by purging more than 100,000 alleged followers of the preacher from their jobs in the military, judiciary and other state institutions.
Turkey lost its last investment grade rating in January when Fitch cut its sovereign debt to junk. Moody’s downgrade adds to the country’s troubles as it relies on short-term capital flows, foreign borrowing, tourism revenues as well as foreign direct investment to finance its current-account deficit.
According to Moody’s, weaker growth is also hurting Turkey’s key credit anchor -- its healthy public finances and low government debt.
Following Moody’s announcement, Bulent Gedikli, a senior adviser to Erdogan, criticized the report on his Twitter account and said, “Moody’s has done a night operation again and announced a report based on virtual fears and non-existing risks.”
