Tag Archives: anti-government

Financial Analysts Watch Turkish Protestors

14 Jun

Civil unrest in Turkey is causing some concern on the part of credit agencies over whether Turkey will be able to maintain its economic performance.  While Turkish markets have recently rallied in light of Moody’s decision to upgrade the country, anti-government protests have occupied the capital and other Turkish cities for more than two weeks.  Protestors claim the political part in power is moving public policy to favor Islamic law, even though the country is officially secular.  A recent law curbing alcohol sales seems to have been the last straw for the non-religious half of Turkish citizens, and protests have persisted and in some cases become violent.

Rating agency Moody’s, led by Raymond McDaniel, said that the Turkish government will need to act swiftly and effectively to curb the unrest in order to maintain its newly achieved rating of Baa3, because the protests could reduce tourism revenue and thus affect the country’s debt to income ratio.  The protests could also make foreign investors hesitant to bring capital into the country if the government is seen as unstable, which is why agencies are emphasizing the dependence on the government’s reaction to the protests, rather than on the protests themselves.  Overall, both Moody’s and rival agency Fitch said there is no danger of a credit downgrade at this time.

The Turkish economy is performing better than expected this year and has managed to bring unemployment to the lowest rate in seven years.  Inflation is also down and the working class seems to be happy.  So far the protests are isolated to the educated groups of people who are against religious rule, rather than being able to ignite the working class.  Most analysts feel the protests will be controllable and not effect Turkey’s economy.