By Gokhan Kurtaran
ANKARA
Falling oil prices have proven to be a pleasant surprise for Turkey in helping to narrow the current account deficit, said Senior Director of global rating agency Fitch Ratings.
Speaking to The Anadolu Agency on Monday, Paul Rawkins said that the declining oil prices have lowered Turkey's current account deficit as well as compressing inflation.
"Falling oil prices have improved the inflation outlook for Turkey but they should not be considered a one-way bet," Rawkins said, and added that the currency remains weak and volatile while putting upward pressure on prices.
"Despite the positive effects of low oil prices, Fitch continues to forecast growth in the region of three to four percent over 2015-2016, pending greater commitment to structural reforms," he said.
The Turkish lira has lost record value against the dollar and it is likely to remain one of the more volatile emerging market currencies, Rawkins said.
The Turkish lira is to remain unstable "due to its still large current account deficit and gross external financing requirement, which leaves it vulnerable to shifting investor sentiment," he added.
Despite the rising anticipation of interest rate cuts by the Turkish Central Bank, Rawkins said that their stance on monetary policy remains unchanged.
"We perceive policy coherence and credibility in Turkey as weaker than rating peers because of the unpredictability of monetary policy," he added.
In December 2014, Fitch Ratings had increased Turkey's economic growth prediction for 2015 to three percent while anticipating an 8.2 percent inflation by the end of 2014, seven percent for 2015 and 5.8 percent for 2016.
The rating agency had left the country's credit rating unchanged at BBB- at its last evaluation in October. The next planned assessment for the country's credit rating and outlook is for March 20 and Sept. 18.
