Despite the hawkishness of the global financial turmoil, the Government and Standard & Poor’s remain confident on Turkey’ ability to overcome the crisis.
In fact, Turkey’s economy is nowadays much more resilient to external shocks due to its strong macroeconomic fundamentals. The banking system is healthier, the Government’ outstanding debt remains limited as a percentage of GDP while the fiscal discpline is relatively strong with the Government recording an impressive primary surplus of TRY14.1bn in August, bringing the primary surplus to TRY41bn year-to-date , already beating the Ministry of Finance initial target.
Nevertheless, the economy is slowing down with the GDP only growing by 1.9% during the 2nd quarter, significantly lower than expectations. Moreover, the financing of the widening current account deficit (YoY C/A deficit at US$47bn) could be threatened by tighter market conditions due to lower FDI, lower portfolio investments and surging FX corporate borrowings.
Meanwhile, markets remain extremely volatile and tuned to global developments.
The Turkisk bulletin (116 ko)