Moody’s slashes Turkish growth forecast to 2.5 percent
The ratings agency said in its global macroeconomic outlook report on May 30 that its forecast for Turkey’s gross domestic product growth has been dropped to 2.5 percent this year from 4 percent. The agency also decreased the forecast for 2019 to 2 percent from 3.5 percent.
The Turkish economy grew 7.4 percent last year.
President Recep Tayyip Erdoğan’s recent remarks on increasing his control over monetary policy after the presidential and parliamentary elections on June 24 “further damaged the credibility of the Turkish Central Bank’s inflation-targeting framework,” Moody’s said.
“A worsening of internal and external imbalances, along with a reliance on short-term funding, has increased susceptibility to rising global interest rates and currency depreciation. Foreign currency exposure of the banking sector as well as corporate sectors present additional financial stability risks,” it added.
The lira has lost 19 percent of its value against the greenback since the start of April.