Credit FAQ Discusses What Early Elections Could Mean For Turkey
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MADRID (Standard & Poor’s) Aug. 21, 2015: Standard & Poor’s Ratings Services

published a Credit FAQ today, “What Early Elections Could Mean For Turkey.”

Turkey’s June elections resulted in a hung parliament. Since then, political

parties, including President Recep Tayyip Erdogan’s Justice and Development

Party (AKP), have held talks on a possible coalition without reaching an

agreement. Alongside the rising domestic political uncertainty, Turkey is

facing mounting geopolitical concerns along its southeastern border. The

recent escalation in violence between militants from the Kurdistan Workers’

Party (PKK) and the government is also fueling the disquiet.

 

Prime Minister Ahmet Davutoglu returned the mandate to form a new government

to President Erdogan a few days ago, following the inconclusive coalition

talks. Earlier today, the president called for early elections, which will

likely be held in November. Turkey is consequently unlikely to regain a stable

government before the end of 2015. In Standard & Poor’s Ratings Services’

opinion, the uncertain political landscape could weaken the policy response to

both external and domestic events, including potential capital outflows.

The FAQ examines the impact of elections on Turkey in the context of its

external profile, and what a reversal of foreign capital outflows could imply

for GDP growth and for the banking sector.

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