ANKARA: Turkey’s limp consumer confidence picked up from a six-year low in October, data showed on Oct. 22, but ratings agencies highlighted risks to economic growth from a Nov. 1 election that may produce no outright winner.
Opinion polls suggest the Justice and Development Party (AKP), which has dominated politics for 13 years but lost its parliament majority in June, will again fail to secure enough votes to govern alone and have to form a coalition.
Political uncertainty generated by the inconclusive June vote pushed the consumer confidence index down to 58.52 points in September. The Turkish Statistics Institute (TÜİK) said it has rebounded to 62.78 in October.
With economic growth flagging and government reform efforts stagnating in the current political impasse, Fitch Ratings on Oct. 22 noted the importance of next month’s vote.
If November’s election led to the formation of a stable government, structural reform and growth could benefit,” it said, while noting opinion polls pointed to a similarly inconclusive outcome.
However it said that despite the “heightened political uncertainty”, commitment to fiscal discipline appeared to command broad political support, with the major parties making only “modest” pre-election spending commitments.
Rival ratings agency Moody’s also touched upon the issue of political uncertainty in a report on Oct. 21 evening on emerging market sovereigns.
Turkey stands out as most vulnerable to external risks because of its high reliance on external capital and large stock of external
