Moody’s estimates Turkey growth between 2.5-3.5 percent

Monday, August 11, 2014

Ratings agency points to suppressing effects of interest rates and high inflation in emerging economies.

Ratings agency points to suppressing effects of interest rates and high inflation in emerging economies.

LONDON – Moody’s rating agency has estimated Turkey’s growth performance at 2.5-3.5 percent, below the government’s four percent medium-term economic targets, citing the suppressing effects of interest rates and high inflation in emerging economies.

In its Credit Outlook report published on Monday Moody’s said that growth estimations for some emerging economies have been revised in relation to interest rate rises introduced by central banks to cope with increasing inflation and that this would suppress growth outlook.

Moody’s research suggests that high inflation, high interest rates and a slowdown in exports may suppress the growth outlook of emerging economies for this and next year but developed economies – fueled by investments – are expected to grow significantly in 2015.

As one of emerging economies Turkey’s growth in the report was estimated to hover between 2.5-3.5 percent this year and 2015.

However, Turkish economic officials have repeatedly expressed optimism in four percent growth as a medium-term economic target and their commitment to achieve this goal.

Speaking in July, Turkey’s Deputy Prime Minister Ali Babacan said: "If we do not see a substantially negative development in exports, a four percent growth target is achievable.”

Demand in China, one of the major export markets for many emerging economies, could be weak for a time and inflation levels in emerging economies can be relatively high during the forthcoming period, Moody’s also warned.

The agency’s report indicates that the global economy could lag behind average performance this year, stressing that a recovery may only start from next year while the G-20 major economies are expected to grow by 2.8 percent on average this year and then speed up to 3.2 percent in 2015.

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