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Istanbul The warning is clear. The Fitch rating agency downgraded Turkey again on Friday, at the BB level, the outlook is negative. The justification does not only provide a clear description of the pessimistic sentiment among investors. It is above all a warning to Turkey's new finance minister, Berat Albayrak.
"In our opinion, the credibility of Turkish economic policy has suffered in recent months", warn the authors, adding to the presidential election won by Erdogan At the end of June, "The first steps after the elections increased uncertainty. "
Fitch's writers believe that little will change in the future. The reason: the new Turkish leadership. Fitch's writers could also have written, "Mr. Albayrak, they finally act! "
President Erdogan had won the election on June 24 with 52.5%. With his victory, a constitutional amendment came into force granting him extensive powers. Erdogan can determine his cabinet without parliamentary approval and pbad parliament in other essential areas of politics
This showed Erdogan last Tuesday. He decreed that he would appoint the head of the Turkish central bank and his deputy himself. Previously, the approval of the People's Assembly was necessary, in which the Erdogan AKP had recently lost the majority. Since then, many investors fear that Erdogan will reduce interest rates to revive the economy without tackling rampant inflation.
The country's gross domestic product grew 7.4% last year, more than any other country. But Turkey suffers from a high inflation of more than 15% and a weak Turkish lira, which has lost more than a quarter of its value against the US dollar since the beginning of the year. 39; year. To this is added the global environment of conflicts and commercial wars.
The authors of the US agency see the greatest danger in the country's large foreign trade deficit. This means that Turkey currently imports a lot more than it exports. Fitch therefore thinks that the difference at the end of the year will be 6.1% of Turkish gross domestic product.
By the end of 2019, the deficit is expected to be reduced to 4.1% of GDP. But net foreign investment would then represent only one percent of GDP. In other words, for three quarters of the national trade deficit, the country has to borrow new debts.
The country's heavy dependence on a new debt threatens the stability of the country in the long term, they are sure of the Fitch experts. In addition, badysts in the House doubt that Turkish leaders will be able to cope with the problems – high inflationary inflation.
"A sustained reduction in inflation would require more confidence in the independence of the central bank," But: "The outlook is uncertain." The authors express it concretely with the new staff: "The key figures of the old cabinet are no longer part of the new government," complain the authors.
The new finance minister Albayrak is also a son-in-law by President Erdogan. As Minister of Finance and Economic Development, he is one of the key members of President Erdogan's new cabinet.
This week he announced goals for his economic policy. Albayrak calls the reduction of inflation and the balancing of the economy "highest priority". A "clear plan" will be released as soon as negotiations with all business representatives have been concluded.
Future fiscal policy should also contribute to long-term price stability. Even his predecessor Mehmet Şimşek had announced in an interview with Handelsblatt that he wanted to raise his tax rates in order to restore public finances. Albayrak said the new tax legislation should be predictable and simple in its structure. Many promises – which must finally be followed by actions.
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