International ratings agency Moody’s has warned that Prime Minister Recep Tayyip Erdoğan’s victory in Turkey’s recent presidential elections might not abate political tension, stressing that economic risks remain.
“We caution that the conclusion of the presidential election is unlikely to resolve Turkey’s key economic and institutional credit challenges because of ongoing domestic political tension and uncertainty that will prevail at least through the next parliamentary elections,” the agency said in a statement released on Aug. 15.
Detailing the referred weaknesses, the agency named slower growth, high inflation, material external vulnerabilities, and the weakening independence of key institutions such as the Central Bank as being among the key challenges.
The ratings agency further said the credit implications of Aug. 10 presidential election would not be clear until a new prime minister is appointed in late August and general elections, which are due by next June, have been held.
“Until the political landscape reaches some stability, the country’s structural reform agenda is likely to suffer, leaving Turkey exposed to potential shifts in international market sentiment,” Alpona Banerji, vice president and senior analyst at Moody’s, said in the note.
Fellow agency Fitch also recently released a statement warning about the lingering risks after the elections, sparking a reaction from the government.
“Erdoğan’s outright victory in Aug. 10’s vote, in the first round of Turkey’s first popular presidential election, does little to ameliorate the political risk to Turkey’s sovereign credit profile,” Fitch Ratings had said on Aug. 11.
Economy Minister Nihat Zeybekci subsequently lashed out at the agency, accusing ratings agencies of being “politically biased.”
“It is impossible for us to regard the institution [Fitch] that issues political risk warnings after our history’s most important and democratic elections as objective,” Zeybekci wrote on his Twitter account on Aug. 12.
“You have to be blind and ignorant to not to see the intention behind Fitch’s decision,” he added.