Turkey's economic indicators better than other countries with same rating

Published 05.08.2016 01:26
Updated 05.08.2016 01:28

Taking into consideration Turkey's negative outlook on July 18 following the Gülenist Terror Organization's (FETÖ) coup attempt, Moody's is expected to leave the rating unchanged on Friday.

After Moody's took Turkey's "Baa3" credit rating under negative observation following FETÖ's coup attempt, it triggered questions concerning if the U.S.-based credit rating agency would take back Turkey's investment-grade status.

Economists do not expect a negative assessment from Moody's since the markets put themselves back together rapidly in the aftermath of the coup attempt, and they think it is highly possible for Moody's to pass Turkey's rating on Friday. Coming together with representatives from Moody's last week, economy officials said the meeting was held in a very positive atmosphere, by supporting expectations.

Countries in the low-grade investable group including Turkey are represented with "Baa3," "Baa2" and "Baa1" credit ratings. "Ba1," "Ba2" and "Ba3" credit ratings are just below "Baa3" and are a "speculative/garbage" level.

While the credit ratings of the countries with medium grade is defined as "A1," "A2" and "A3," prime and high grade countries are rated with "Aaa," "Aa1," "Aa2" and "Aa3."

Turkey separates itself from its group in economic indicators

The countries rated as investable by Moody's in the low grade include Mauritius, Oman and Thailand with a "Baa1" rating, and Bahamas, Bulgaria, Colombia, Italy, Panama, the Philippines, South Africa, Spain and Uruguay, with a "Baa2" rating.

Among the countries rated with this category's lowest rating are Turkey, India, Indonesia, Kazakhstan, Namibia, Romania, Slovenia and Trinidad and Tobago.

According to the International Monetary Fund's (IMF) data, it is surprising that most of the countries with higher ratings than Turkey cannot be compared to Turkey in terms of macroeconomic indicators.

Given the IMF's 2016 growth estimations, with 3.8 percent, Turkey is ahead of Mauritius, Thailand, Spain, Colombia, Bulgaria, Oman, Bahama, Uruguay, Italy and South Africa, which have higher credit ratings than Turkey. On the other hand, Turkey's economy is expected to grow larger than Kazakhstan, Slovenia and Trinidad and Tobago, which have the same ratings as Turkey.

Considering the numbers of economic growth, only India, Italy, Spain and Indonesia are ahead of Turkey, which has a national income of $751.2 billion, followed by Thailand with $409.7 GDP. The fact that Turkey doubled its closest rival's economic growth is quite noteworthy.

According to public debt indicators, Turkey outscores nearly all the low-grade investable countries. In terms of public debt to GDP ratio, only three countries out of 21 are in better conditions than Turkey.

While public debt to GDP ratio is expected to reach 30.7 percent in Turkey, the said ratio is estimated as 30.2 in Bulgaria, 27.6 in Indonesia and 22.1 percent in Kazakhstan.

Therefore, out of 21 countries in the low-grade investable level, Turkey is ahead of 13 in growth rate, 16 in national income and 17 in public debt to GDP ratio.

Turkey outscores the countries in the garbage level

Among the speculative group countries which are ranked just below "Baa3" and will include Turkey if its rating is downgraded, are Azerbaijan, Costa Rica, Guatemala, Hungary, Morocco, Paraguay, Portugal and Russia with "Ba1," Bahrain, Brazil and Croatia with "Ba2," and Bangladesh, Bolivia, El Salvador, Georgia, Ivory Coast and Tunisia with a "Ba3" rating.

Comparing them with Turkey after it is included in the group, Turkey outscores them in terms of national income, growth rate and public debt to GDP ratio.

While Turkey is expected to be ahead of 14 countries in this group with its $751.2 billion national income, only Russia with $1.1 trillion and Brazil with $1.5 trillion are ranked above Turkey. However, Turkey is expected to grow larger than 12 countries, including Russia and Brazil, this year.

On the other hand, in public debt to GDP ratio indicator, Turkey outscores all the countries in this group except for Paraguay, Guatemala and Russia.

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