No sign Turkey's economy affected by protests - Fitch
The Turkish economy has performed well, inflation has come down,
and unemployment in 2012 was at a seven-year low of 9.2 percent,
the Fitch rating agency reports.
“Although Turkey’s current account deficit and short-term debt
are large, financing has proved resilient throughout the
post-Lehman Brothers collapse and the Eurozone crises,”
according to Fitch.
“Much will depend on how the authorities respond to the
protests,” the rating agency warned.
“Persistent political and social unrest could deter tourism,
destabilize short-term capital inflows, and drive up inflation
and damage economic growth. Longer-term aspirations to attract
more FDI could also suffer a setback. If such developments were
to occur and have a material adverse effect on the economy, the
unrest could exert pressure on the sovereign rating,” the
The Gezi Park protests in Istanbul have spread to the rest of the
country and shaken Turkish markets and businesses. On
Thursday the country’s main stock index, the BIST 100, fell more
than 7 per cent and closed 4.7 per cent down. The market
fall took Turkey’s stock exchange to 20 per cent below its recent
high, the FT reports.
The impact of the demonstrations on the real economy appears to
be limited so far. However, further escalation is expected to be
especially damaging to the tourism industry. The Turkish economy
hinges on the service sector as it makes up 63% of the country's
GDP. Turkey is the sixth most popular holiday destination in the
world, having attracted 31 million tourists in 2011 and valuing
the industry at $30bn, BBC reports.
The turmoil is a new twist for Turkey, which was lauded as an
economic powerhouse and democratic exemplar for the rest of the
Muslim world during the Arab Spring. Turkey's economic growth has
skyrocketed since the early 2000s - around the same time Prime
Minister Recep Tayyip Erdogan and his Justice and Development
Party (AKP) came to power. Erdogan's government implemented
austerity measures advised by the International Monetary Fund.
After that the economy took off, the budget deficit and inflation
were tamed, and all loans from the International Monetary Fund
were paid off, BusinessWeek reports.
The country’s per capita income has nearly tripled to over
$10,000. Turkey is now the fastest-growing economy in Europe with
2.2% GDP growth in 2012.