While the Turkish economy has gone from the sick man of Europe to one of the continent’s strongest and most stable economies over the last 10 years, it still has its problems. The biggest one has always been unemployment, but during the last 2 years this really started to fall. That is, unlike its other main problem the trade deficit.
Turkish GDP has grown 16.7% in the last 2 years (8.2% in 2010 and 8.5% in 2011), but this year growth is to slow to around 4%. The government said it wants this slowdown so it can consolodate on the growth already achieved, and now, arguably proving their point the trade deficit is starting to come down, where it hasn’t during the two years of stronger growth.
According to the latest data the Turkish trade deficit stood at $5.51 billion in October down 31% from October 2011. Exports grew by 11.6 percent year-on-year in October, while imports posted a 5.6 percent decline in the same compared period, according to Turkish Statistical Institute (TÜİK) data compiled in cooperation with the Economy Ministry. The 12-month gap excluding energy dropped to $33.2 billion, the lowest level since October 2010.
Turkey has just received its first investment grade rating from Fitch and the hope that others would follow suit. This can only be helped by positive events such as this. Oyak Yatırım Economist Gülay Elif Girgin believes it could bring an investment grade rating from Moody’s early next year.
“The outlook for the foreign trade balance helps the current account deficit improve and in a sense this strengthens the possibility for [Turkey] to receive an investment level rating from another rating agency. Given the current levels of ratings, we expect Moody’s to elevate Turkey at investment level in the first half of 2013,” he said.