S&P announces minimum wage forecast: Will there be a raise?

Following Fitch, which upgraded its rating in March, Standard and Poor's (S&P) took a similar step. S&P raised Turkey's credit rating from B to B+ after 11 years.

S&P Global Senior Director Frank Gill, a guest on Bloomberg HT, shared his assessments regarding the Turkish economy.

WILL THERE BE A MINIMUM WAGE RAISE?

In his speech, where he noted that they observe dollarization among households in Turkey, Gill said they expect the ratio of the current account deficit to national income to fall below 2 percent. Regarding dollarization and growth expectations in Turkey, Gill stated, “Excluding our growth targets and statistically excluding the base effect in 2024, we expect growth to be around 1.1-1.3 percent. With the economy so dollarized under current conditions, the exchange rate will be one of the most important anchors right now. We foresee the Dollar/TL level at 34-35 by the end of the year.”

Noting that last year's minimum wage increase reduced margins, Gill said the government might strive to keep the TL stable this year. Stating, “Our base scenario is that there will be no second minimum wage hike this year,” Gill indicated that this would bring about a critical process for inflation and would be a development that could also shape 2025 exchange rate expectations.

"WE WILL LOOK AT NET RESERVES"

Commenting on a possible future credit rating upgrade for Turkey, Gill said, “For another rating upgrade, we will look at Turkey's net reserves. We are not ruling out a hard landing in the Turkish economy.”

News Source: 12punto