Moody’s warns Turkey on economic imbalances

Turkey’s growing domestic and external imbalances could affect its positive rating outlook if they are left unaddressed, Moody’s warned on Wednesday, calling for government action.“Growing domestic and external imbalances will, if left unchecked, begin to adversely affect Turkey’s rating trajectory,” Moody’s Investor Service said in a statement. “The resilience of Turkey’s economic and fiscal fundamentals during the global financial crisis has underpinned the positive outlook on the country’s Ba2 rating but a lack of corrective action on domestic and external imbalances could stall positive rating momentum,” it added. The global economic crisis saw the Turkish economy slump 4.7 per cent in 2009 but it grew by 8.9 per cent last year, higher than government expectations.“Turkey’s large current account deficit is a particular issue, as the government is now financing its deficit using sources of capital that are more volatile” Moody’s said. This leaves Turkey “susceptible to sudden shocks or shifts in investor sentiment,” it added. From / Gulf Today