During the "New Horizons in Global Steel Markets" 11th Annual Conference organized by SteelOrbis in Istanbul on November 17, economist Murat Sağman of Bilgi University stated that credit ratings carry high importance for Turkey, and, since international credit rating agencies Standard and Poor (S&P) and Moody’s have already downgraded Turkey's credit rating, it now only remains for Fitch - the most important credit rating agency for Turkey - to make the decision on its credit rating for the country. Mr. Sağman said that the decision is expected to be made at a meeting to be held soon and is expected to result in a reduced credit rating for Turkey. He said that foreign fund investors need positive credit ratings from at least two of the agencies before they will make investments in a country. If Fitch downgrades Turkey’s credit rating, costs in relation to banks and loans will increase, which will negatively impact costs for companies in Turkey.
Mr. Sağman stated that the loan-to-deposit ratio in Turkey is high and, since banks are issuing loans in excess of their deposits, interest rates are not moving downwards. Stating that Turkey’s foreign debts are due to a lack of sufficient deposits in the country, Mr. Sağman said that relations with the EU are still very important for Turkey and any break with the EU will negatively impact the national economy.
Regarding Donald Trump’s remarks that he will focus on economy as the new president of the US, Mr. Sağman stated that the US economy may grow faster and the US dollar will continue to strengthen, which is bad news for Turkey.
Sharing his forecasts for 2017, Mr. Sağman said that the US dollar will likely continue to gain strength against the Turkish lira, reaching 3.45-3.50 levels, while he expects that inflation will be at 8-9 percent and the Turkish economy is expected to grow by 2.0-2.5 percent. Meanwhile, Brent oil prices are expected to range at $55-60 levels in 2017.