Turkey struggles to meet targets
Positive reasons for investing in Turkish sovereign debt are becoming more difficult to find these days. However, yields are on the increase and years of fiscal discipline have greatly reduced the risk of default, writes Bernard Kennedy.
One by one, Turkey has been losing its ‘stories’. First, five years of GDP growth averaging 7.5% gave way to a more modest performance of 4.5% in 2007, reflecting higher interest rates, a downturn in housing and construction and a poor agricultural harvest. Then, rising global energy and food prices helped to revive inflation, which had fallen to 6.9% as of July 2007, its lowest level for over three decades. By May 2008, consumer prices had reached 10.7% and were set to rise further, forcing the central bank to postpone its 4% year-end target until 2012.
