Moody's warns of recessions in Turkey and Argentina after the currency crisis

Turkey and Argentina may have left the crises of their respective currencies, but their economies have a thorny future over the next few quarters, according to Moody's Investors Service .

The falls of the La Lira and the peso, two of this year's underperforming currencies, will translate into strong economic contractions as the growth of advanced and emerging markets slows, said Moody's in a report released Thursday.

With adjustment While monetary policy in major economies and trade conflicts undermine investment worldwide, Moody's is taking a more and more pessimistic stance on countries' growth prospects developing countries, such as Turkey and Argentina, which are relatively exposed to are therefore the most vulnerable. "

The Turkish economy is expected to contract in the first half of the year, and next year, since the fall of the lira, and the rising costs of borrowing, the consequences will be heavy," he said. the rating agency: Argentina's gross domestic product will only regain positive growth in 2020 because of the strong monetary and fiscal consolidation of the country by the International Monetary Fund's program, said Moody & #

Turkish inflation oscillates at the fastest growing rate since President Recep Tayyip Erdogan came to power 15 years ago and high interest rates Darken the investment outlook Despite some losses, the lira continues to fall by 30% against the dollar since the beginning of the year.

"It is likely that the two-year inflation figures, the sharp rise in costs of em Pruning and reducing bank loans are affecting household purchasing power, private consumption and investment, "said Moody's.

The IMF echoed Moody's warning and predicted that Turkish economic growth would fall to 0.4%. in 2019 3.5% this year. "The weaker reading, higher borrowing costs and high uncertainties weigh on investment and demand," the fund said in a report released on Thursday.

Moody's estimate that the Turkish economy will grow by 1.5%. in 2018 and will contract 2% next year. The agency predicts that Argentina's GDP will decline by 2.5% this year and by 1.5% in 2019.

Turkey also has to face high inflation, despite the deterioration of the outlook for its economy. Moody's expects price growth in Turkey, which accelerated to 25.2% a year in October, to remain in double digits until 2020, due inflationary expectations under the effect of the pressure of the exchange rate and oil. [19659002] In Argentina, inflation expectations will continue to rise despite the strict position of the Central Bank, said Moody's, adding that it will take some time before the benefits of monetary policies do not materialize completely. Inflation is expected to fall gradually to 20% by the end of 2020.