International credit rating agency Fitch Ratings released its latest assessment of the Turkish economy. The agency affirmed Türkiye's long-term foreign currency credit rating at 'BB-' and kept the credit rating outlook 'stable'.
Strengths of the Economy
Among the factors supporting Türkiye's credit profile, Fitch listed low public debt, a large and diversified economy, high per capita income compared to similarly rated peers, access to external financing during times of stress, and a resilient banking sector.
Growth and Inflation Outlook
The report stated that Türkiye's economy is expected to grow by 2.8% in 2026 and 4.4% in 2027. While assessing the potential growth rate to be close to 4%, it emphasized that tight monetary policy will continue to rebalance economic activity.
Annual inflation, which stood at 32% in June, is forecast to decline to 29.5% by the end of 2026. It was noted that the decline in inflation will be supported by the continued tight monetary policy stance.
Reserves Expected to Strengthen
Fitch noted that the Central Bank of the Republic of Türkiye's (CBRT) increase in its funding cost by 300 basis points and steps to limit credit growth supported a recovery in international reserves. It stated that reserves regained strength after foreign exchange interventions to support the lira during the initial phase of US-Iran tensions, and gross foreign exchange reserves are expected to reach $167 billion by the end of 2026.
Conditions for an Upgrade
Fitch stressed that a credit rating upgrade would require a permanent reduction in external financing needs, stronger external financial buffers, and increased confidence in the tight economic policies supporting the decline in inflation.
