Turkey Upgrade Depends on Growth and Inflation, Fitch Says
An upgrade “depends on Turkey achieving strong growth without high inflation,” Parker said on the sidelines of a conference in Frankfurt. The country’s public finances look “very strong,” though there is concern about the need to reduce the current account deficit, he said.
Fitch, which ranks Turkey one level below investment grade, put the country under review for a possible upgrade at the end of 2010 and will decide within “a couple of years” from then, Parker said when asked about the timing of a decision.
Fitch’s considerations over the potential upgrade “have not really changed,” he said.
Economists and business leaders raised their forecasts for Turkish inflation to 6.83 percent from 6.77 percent over the last two weeks, according to a fortnightly survey published by the central bank.
The inflation rate increased to 6.7 percent in August from 6.3 percent the previous month, the statistics agency reported on Sept. 5.
“Inflation is still quite high and above the central bank’s target,” Parker said.
The central bank has aimed to stimulate growth this year amid a global economic decline by cutting interest rates to a record low while also keeping inflation under control even as the lira has depreciated 12 percent against the dollar.
The current-account gap, a measure of the country’s balance of imports and exports, reached a record $72.5 billion deficit in the 12 months through June.
The shortfall, equal to about 10 percent of gross domestic product, has driven the fall in the lira and represents a significant imbalance that could lead to an “abrupt” drop in growth, Goldman Sachs Group Inc. said in a report Aug. 26.
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