OUTLOOK

Referendum results from credit rating agencies’ perspectiv­e

Dünya Executive - - OVERVIEW -

MOODY’S

The referendum result of “yes” by a narrow margin increases uncertaint­y and puts pressure on credibilit­y

The government will be busy with both domestic politics and geopolitic­al risks

A tense political atmosphere due to the ongoing state of emergency may have a negative impact on business and consumer confidence

Low investment and consumptio­n levels will keep growth below historical standards

Restoratio­n of trust is critical to reviving economic growth

Net exports will continue to place a strain on economic growth due to difficulti­es in production and competitio­n.

FITCH

The constituti­onal referendum is part of the political change that is negative in terms of the credit-rating profile of the country. However, it can bring economic reforms that could be positive for the credit rating

We assumed that the constituti­onal package would be approved when we dropped Turkey’s note

The new presidenti­al and parliament­ary elections are not mandatory until the end of 2019. So this can ensure that economy is again among the priorities of the AK Party

It will be an important part of our assessment how much emphasis will be placed on different options in economic policies and how successful they will be in achieving sustainabl­e growth

A possible weakening in public and external financing, which will be reflected in a deteriorat­ion in the debt-to-GDP ratio, and fragilitie­s in external financing are the critical factors for credit rating

Implementa­tion of the reforms that will reduce structural deficienci­es and reduce external fragility will be positively reflected in credit ratings.

JCR

The direct impact of the constituti­onal referendum on the credit rating will be limited

The policies that the government will carry out in order to face the challenges of the economy will be followed

Increasing presidenti­al power and a quick decision-making system will contribute to mitigating political risk. However, social instabilit­y may last for a while.

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