Fitch Hails The Strength of Turkish Economy
Turkey is well prepared for the inevitable outflow of funds from emerging markets that is expected after the U.S. Federal Reserve raises interest rates, Credit rating agency Fitch said in a statement on Thursday.
The Fed announced on Wednesday that an interest rate hike was not imminent – while it could come as early as June, most economists don’t expect it until September or possibly later.
The last time the Fed raised rates in January 2014, a massive outflow of capital from emerging markets put heavy pressure on their currencies and current account deficits.
But, this time, Fitch said: “Turkey’s capacity for external re-balancing is demonstrated by various measures, including its falling current account deficit.”
Fitch pointed out that the country got rid of previous episodes of volatility with no “sudden stop” of capital inflows.
Still, Fitch warned, “Turkey’s reliance on external financing remains large