Fitch revises Turkey’s outlook to stable

Nov 23 Fitch Ratings Canada Goose sale has revised the Outlooks on the Republic of Turkey Long term foreign and local currency Issuer Default Ratings (IDR) to Stable from Positive and affirmed canada goose replica the ratings at The agency has also affirmed Turkey Short term foreign currency IDR at and Country Ceiling at

revision of the Outlook to Stable reflects an increase in near term risks to macroeconomic stability as Turkey faces the challenge of reducing its large current account deficit and above target inflation rate against the background of deterioration in the canada goose outlet toronto factory global economic and financing environment, says Ed Parker, Managing Director in the EMEA Sovereign group at Fitch.

the ratings are supported by favourable government debt dynamics, a healthy potential growth rate and a strong banking sector. If Turkey attains a landing and near term macro financial risks recede, then upward rating dynamics could resume, added Parker.

Turkey macroeconomic performance has been very volatile as it buy canada goose jacket has a low savings rate and has been 2018 canada goose outlet unable to grow robustly without generating major imbalances. In Fitch view, the economy in H111, with bank credit surging by 36% yoy, fuelling double digit GDP growth, rising inflation and a widening in canada goose clearance the current account deficit (CAD) to USD78bn in the 12 months to September 2011 (which Fitch estimates would be the second highest in the world after the US).

Economic activity and credit growth have Canada Goose online started to slow in recent months. Fitch base case is that GDP growth will ease to 2.2% in 2012 canada goose store from 7.5% in 2011, before recovering to canada goose 4.5% in 2013, inflation will decline and the CAD will Canada Goose Jackets narrow. However, Turkey large external financing requirement leaves it vulnerable to the deterioration in the global outlook and there is a downside risk of a less benign macroeconomic adjustment.

Fitch forecasts the CAD to increase to 9.8% Canada Goose Outlet of GDP in 2011 from 6.5% of GDP in 2010, well above the ten year range median of 2%, before easing to 7.6% in 2012. Year to date CAD financing has been dominated by short term and portfolio debt inflows and running down foreign assets, leaving the country vulnerable to the worsening in global financial conditions. In 2012, Fitch estimates that Turkey CAD, amortisation on medium and long term external debt plus stock of short term debt will be around USD194bn, compared with foreign exchange reserves of USD93.6bn at end September 2011. In addition, USD17bn of non residents holding of local currency debt falls due. canada goose coats Turkey net external debt ratios are above the range median and on an upward canada goose coats on sale trend.

Inflation has been significantly canada goose deals higher and more volatile than for range peers. Fitch forecasts inflation at 9.2% at end 2011, well above the central bank (CBRT) target of 5.5%, which would be the fourth time the CBRT has missed its target in six years. Facing challenging and volatile global conditions, the CBRT has deployed an activist and unorthodox policy mix, including low real interest rates. Yet the large lira depreciation, strong credit growth, high inflation and the widening in the CAD mean the extent to which canada goose black friday sale it has helped to support macroeconomic and financial stability is debatable.

Turkey strong and improving public finances canadian goose jacket are a key support for its ratings. Fitch forecasts the buy canada goose jacket cheap general government budget deficit will decline to just 1.3% of GDP in 2011, Canada Goose Parka from 3.3% in 2010 and 5.8% in 2009, albeit buoyed by the booming economy. Public debt dynamics are highly favourable due to the government running primary budget (before interest payments) surpluses, and trend GDP growth above the real effective interest rate. The agency forecasts general government debt to decline to 40% at end 2011 from 42% of GDP at end 2010 and canada goose clearance sale continue decreasing over the medium term. Lower interest costs and a lengthening in the maturity of debt have cut Turkey fiscal financing requirement, while relatively deep local capital markets provide financing flexibility.

Turkey ratings are also underpinned by a sound banking sector, which is well capitalised, profitable and moderate in size, and has a low Canada Goose Online ratio of canada goose outlet store locations non performing loans, a loan/deposit ratio below 100% and minimal FX lending to households. GDP per capita is well above the range median, while the business climate and Canada Goose Coats On Sale governance are stronger, according to World Bank indicators. Conversely, political risk weighs on Turkey ratings. It ranks below the range median in the World Bank governance indicator for stability

Evidence that Turkey can attain a landing with GDP growth returning towards trend, coupled with greater confidence that inflation is on a path towards its target rate and the CAD is narrowing to a more sustainable rate could lead to an upgrade.

However, severe macroeconomic or cheap Canada Goose financial instability such as a crisis and recession or a failure to secure disinflation, for example triggered by external shocks or domestic policy mistakes could canada goose black friday sale lead to negative rating action.