Fitch/Arispe: The major transformation in the Turkish economy can bring significant challenges


In an interview with Bloomberg HT, Fitch Ratings Senior Director Erich Arispe responded to questions from Ali Çınar, the representative of Ciner Media Group in the US.

Arispe stated that there will be a change in economic policy in Turkey, but they do not know which direction this transformation will take.

Arispe mentioned that the new economic model could be a program that prioritizes greater growth and employment. He pointed out that based on signals from Treasury and Finance Minister Mehmet Şimşek, the implemented policy could proceed in a more rational and predictable manner.

In his speech, Arispe emphasized the high inflation of nearly 40% and a significant current account deficit in Turkey, stating that this major transformation could bring “significant challenges” along with it. Arispe continued his remarks as follows:

“There is a need for greater caution regarding potential risks and costs. A weaker lira can potentially increase costs. Rising interest rates can bring borrowing. In Turkey, there is inflation that is very high according to emerging market standards. We have just started discussing interest rate hikes. In that sense, excessively loose monetary policy continues.”

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