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Southeast Europe
February 16, 2019 www.intellinews.com I Page 15
Locals wonder if surprise S&P upgrade is in store for Turkey
Akin Nazli in Belgrade
Turkish markets are focused on Standard & Poor’s’ next scheduled rating review expected
to be released on February 15 after the markets close. The S&P review will be the first issued on Turkey in 2019 to date. Fitch Ratings has pencilled in May 3 for its release.
“No change is anticipated in [S&P’s] credit rating and outlook,” Isbank Research said on February 11 in its weekly bulletin.
However, locals, who are trying to pinpoint just why it is that Turkish markets have experienced an ‘early spring’ since the start of the year, are discussing whether S&P might surprise with an outlook upgrade.
Fitch rates Turkey at BB/Negative together
with Guatemala and Vietnam. Moody’s Rating Services rates Turkey at Ba3/Negative together with Bangladesh, Bolivia and Vietnam while S&P rates Turkey at B+/Stable together with Kenya and Greece.
Fitch will watch Ankara’s policy response to Turkey’s weaker growth outlook and examine whether the relative strength of the country’s public finances can be maintained, the global head of sovereign and supranational ratings at the agency said on January 28.
Awaiting BoP, industrial data
Local markets are also waiting on balance of payments (BoP) and industrial production data for December, set to be released on February 14.
A Reuters survey showed that seasonally-adjusted industrial production is expected to have contracted by 7.5% y/y in December while an Anadolu Agency survey put the expectation at minus 6.8%.
On February 15, the unemployment rate for November, retail sales data for December, central government budget realisations for January and the central bank’s latest expectations survey will also be on the markets’ radar.
Together with this week’s data releases, the initial data set for Q4’s GDP growth will be completed. The Q4 growth data will be announced on March 11.
On March 6, the monetary policy committee (MPC) will hold its final meeting before the March 31 local polls.
Worse-than-expected initial data for Q4 growth might help the MPC justify an earlier rate cut than market players want to see as Turkey pursues an economic recovery.
Turkish President Recep Tayyip Erdogan’s election campaign, which has lately hit Borsa Istanbul-listed lenders but is not currently sending any brickbats the way of his Western allies, and his visit to Russian counterpart Vladimir Putin on February 14 are also on the market’s agenda.
Erdogan has been upping the rhetoric against enemies such as Kurdish separatists but Turks do not yet sense that they are facing any kind of urgent security threat. Thus, they have not yet been distracted from Turkey’s severe economic problems prior to the local polls. Erdogan will discuss the problems with militants in the Idlib zone in Syria with Putin.
In the global context, a big point of discussion is how long the recent increase in financial flows to emerging markets including Turkey can last.