Turkey's Erdogan: Go Ahead, Junk Our Credit Rating

"Go ahead, make my day by junking Turkey's credit rating."

Following the hateful rhetoric unleashed by Philippine President Duterte, it appears bashing the West is back in fashion as Turkey's Tayyip Erdogan does pretty much the same--to equally debatable economic consequences. There is a tendency for developing countries to blame destabilizing events on Western powers, and Erdogan is no exception in this regard when it comes to the coup attempt against him earlier in the year.

On a related note, Erdogan sees a combined political-economic effort to knock Turkey down a peg as the dominant credit rating agencies--all Western, obviously--have put the nation on notice for downgrades to its sovereign debt. Following Erdogan's conspiracy-minded logic, it is of a piece with the white man trying to undeservedly humiliate Turkey:

Turkey’s President Recep Tayyip Erdogan said he is not worried if his country is rated below investment grade as credit rating firms are making wrong decisions because of their political bias. “I don’t care at all, they’re making mistakes and they’re doing it intentionally,” Erdogan said in an interview in New York on Thursday. “Whether you’re honest or not, Turkey’s economy is strong.”

This after Standard and Poors cut Turkey two notches below junk, while the others have placed a negative outlook following the coup:

S&P Global Ratings lowered Turkey’s rating immediately after the July 15 attempt to topple Erdogan citing greater political risks. It was cut by one notch to BB, or two steps below investment grade. Last month, Fitch Ratings maintained its BBB-, the lowest investment grade, while reducing the country’s outlook to negative from stable. That is in line with Moody’s Investors Service, which has placed the country on review for a possible downgrade to junk.

The ratings companies are acting “contrary to economic ethics,” making political statements, Erdogan said. “They’re raising economies that have collapsed, that are finished, on the other hand, they’re either freezing or going towards cutting a country that’s standing on its feet, that’s upright, and where investments are continuing.”

“This is not a respectable stance,” he said. “I’m inviting them to be honest.” Moody’s, which rates Turkey at Baa3, has placed the country on review for a downgrade within 90 days from the day of the statement on July 18. Back in August, Fitch cited “the potential for further disruption from those behind the coup attempt.”

By way of comparison, the Philippines whose GDP per capita is about 36% of that of Turkey receives investment credit ratings from all three. You have to wonder if Duterte keeps acting like, well, Duterte how long it will be before it joins Turkey in junkland. Having striven to reach investment grade ratings for their sovereign debt, loose cannon leaders can hasten their banishment from international economics' promised land.