Turkiye boasts 'large, diversified, resilient economy': Moody's Investors executive
Turkish banks are solid, have pretty good results, says executive at sister to global ratings agency
Risks aside, Turkiye boasts a large, diversified, resilient economy with a solid banking sector, said an executive at Moody's Investors Service, a sister company of the global rating agency, on Monday.
"They (Turkish banks) have had pretty good results. They are solid,” Kathrin Muehlbronner, senior vice president within Moody's Investors Service Sovereign Risk Group, told Anadolu Agency, citing “stabilizing factors."
"Exporters are benefiting clearly very much from the (Turkish lira's) depreciation,” she said, praising the country's “large diversified resilient economy."
She noted that Turkiye may benefit from supply chain shifts in the wake of the coronavirus pandemic, saying: "Turkey can benefit massively from a nearshoring of production by European companies and (from its) Customs Union with the EU."
She said prospects for Turkish economic growth are optimistic, adding:
"Exports are doing well. Lira depreciation helps. There are clear incentives such as credit stimulus for exporters and investments."
Muehlbronner welcomed steps by the Turkish government to shield the poorest households from inflation.
After it took a hit from the pandemic like the rest of the world, Muehlbronner said she expects the Turkish tourism sector to have a good season.
She underlined that Turkish economy may grow faster than the Moody's forecast of 3% this year.
On inflation, Muehlbronner said the upward trend stemmed from the weaker Turkish lira especially through end-2021 and elevated commodity prices.
"We think inflation will drop kind of mechanically at the end of the year because of a base effect," Muehlbronner noted.
Listing risks to the Turkish economy, she said high inflation, currency pressure, and loose monetary policy create downside risks for the country.
The government's forex-protected Turkish lira deposits tool, she said, “was certainly a good step to stabilize the currency. And it has reduced dollarization of deposits by around 10 percentage points.”
“So we're back to the levels of share of deposits and dollars that we had before the latest currency crisis. So that's certainly a positive step." she added.