Turkey attacks S&P for warning about outlook for economy

Turkey’s Prime Minister Recep Tayyip Erdogan addresses members of parliament from his ruling AK Party (AKP) during a meeting at the Turkish parliament in Ankara on April 24, 2012. (AFP PHOTO/ADEM ALTAN)

ISTANBUL, Turkey: Turkish Prime Minister Recep Tayyip Erdogan denounced Standard and Poor’s rating agency on Thursday, saying its downgrading of Turkey’s outlook was clouded by an “ideological approach.”

Erdogan told a televised meeting in Istanbul: “This is entirely an ideological approach. You cannot fool anybody, you cannot fool Tayyip Erdogan.”

He condemned the outlook revision as “very odd” and hit back at what he implied was discrimination by S&P, which had improved the outlook of crisis-hit neighbouring Greece, while lowering the perspective for Turkey.

The Turkish premier also threatened not to recognise the Standard and Poor’s as a credible ratings agency.

On Tuesday, Standard and Poor’s revised the outlook on Turkey’s long-term foreign and local currency sovereign credit ratings to stable, from positive.

On Wednesday, the agency lifted Greece out of selective default status in view of a bond swap which cancelled a big slice of Greek debt.

Explaining its view of Turkey, the agency said: “Less-buoyant external demand and worsening terms of trade (the price of exports compared to imports) have, in our view, made economic rebalancing more difficult, and have increased the risks to Turkey’s creditworthiness given its high external debt and the state budget’s reliance on indirect tax revenues.”

The agency said: “We have revised the outlook on Turkey’s long-term sovereign credit ratings to stable from positive, reflecting our view that the ratings are likely to remain at the current level during the next 12 months.”

Finance Minister Mehmet Simsek joined the government’s criticism and blasted the report as full of “very serious” mistakes.

“They should first do… correct analyses,” said Simsek, accusing Standard and Poor’s of having obsessions about Turkey and failing to appreciate the political stability in the country where the governing Justice and Development Party (AKP) headed by Erdogan is exercising its third term in power in a row.

Turkey’s economy grew by 8.5 percent in 2011 and by 5.2 percent in the final quarter, official data showed on Monday.

The Turkish government forecasts that growth of gross domestic product will slow to 4.0 percent in 2012 owing to the effects of the eurozone crisis, but is confident that the slowdown will be short-term.

However, analysts worry the country’s widening current account deficit is a sign the economy is overheating and is in for a sharper slowdown.

On Thursday, official data put inflation on a 12-month basis at 11.14 percent in April after holding steady at 10.43 percent for two months.

Turkey’s central bank forecasts inflation to slump to 5.0 percent in 2012.

via THE DAILY STAR :: Business :: Middle East :: Turkey attacks S&P for warning about outlook for economy.