The credit challenges facing Turkey include substantial external vulnerabilities, including a large current account deficit and history of political turbulence derived from conflict between secular and religious elements of society, ratings agency Moodys said in a statement on Tuesday. Turkeys resilience to economic, financial and political vulnerabilities has strengthened considerably in recent years, nonetheless there are some noteworthy areas of political risk in Turkey some of which stem from secular-religious tensions, others from longstanding regional and ethnic conflicts and due to the size of the countrys external imbalances, Moodys considers Turkeys susceptibility to event risk to be high, the rating agency said. A prerequisite for Turkey attaining an investment-grade rating is a greater resilience to balance of payment shocks, such as a sharp decline in capital inflows into the country, according to the rating agency. Moodys would also consider upgrading Turkeys rating if the government made further progress in lowering its external vulnerabilities by structurally reducing its CA deficit, increasing foreign exchange reserves or reducing the private sectors external borrowing, the statement furthered. Moodys expects Turkeys CA deficit to be 7.8% and 7.4% of GDP in 2012, and 2013 respectively while its GDP growth forecasts stands at 3% and 3.8% for this year and next year. Moodys also said that Turkeys currently positive outlook on its sovereign bond rating would likely to be moved to stable if progress on addressing external vulnerabilities were to be reversed. |
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