Turkey elections positive for credit ratings: experts

By Tuba Sahin

ANKARA

Declining uncertainty over domestic politics after Turkey’s presidential and parliamentary elections would be positive for credit ratings, a key Japanese agency said on Tuesday.

"[President Recep Tayyip] Erdogan’s victory is expected to further strengthen AKP’s [Justice and Development Party] political base following the introduction of the executive presidency," the Japan Credit Rating Agency (JCR) said in a statement.

According to Turkey’s Supreme Election Council (YSK), on Sunday Erdogan won an absolute majority in the presidential election with 52.5 percent of the vote, while his closest rival behind at 30.6 percent, with 99.9 percent of ballot boxes opened.

In the parliamentary polls, the People's Alliance of the Nationalist Movement Party (MHP) and Justice and Development (AK) Party won 53.6 percent of the votes, with 99.9 percent of ballot boxes opened.

The JCR said the major ongoing macroeconomic statistics, such as the inflation rate and the current account deficit, indicated that measures to correct macroeconomic imbalances as proposed in the country's medium-term program (MTP) had not fully proceeded as planned.

The credit agency will continue watching whether the new administration will focus on structural reforms aimed at correcting macroeconomic imbalances and whether it will achieve the targets set forth in the MTP.

Turkey's annual inflation rate was 12.15 percent in May, up from 10.85 percent in April, according to the Turkish Statistical Institute.

As noted in the country's MTP introduced last September, inflation is targeted to converge to 5 percent by the end of 2020.

Turkey's current account deficit was $5.43 billion in April, marking an increase of $1.7 billion, year-on-year, according to the Turkish Central Bank (CBRT).

The target current account deficit/GDP ratio is 4.3 percent for this year, 4.1 percent for next year and 3.9 percent in 2020, as stated in the MTP.