Low credit growth points to economic weakness in Turkey – banker

A banker from HSBC has warned that a sharp drop in credit growth could lead to a significant slowdown for Turkey’s economy, the Business Insider’s Will Martin reported on Friday.

"A look at recently released data shows that a more challenging external backdrop and TRY (the Turkish lira) weakness and volatility have dragged credit growth lower," HSBC’s Melis Metiner was quoted as saying in an email to clients.

Turkey’s currency has lost around 40 percent of its value to the dollar this year, much of that in the last month after the United States pressed sanctions and tariff hikes in response to Turkey’s imprisonment of U.S. citizens.

The sudden drop in credit growth is likely to drag down Turkey’s growth altogether, particularly in private investment, she said.

While tight monetary policies would arrest this drop and soften the landing as Turkey’s economy cools, Metiner also noted Turkish President Recep Tayyip Erdoğan’s history of stubborn resistance to hikes in interest rates, a necessary part of that policy.


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