ISTANBUL
Fitch Ratings has affirmed Türkiye’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at “BB-” with a “Stable” outlook, reflecting cautious optimism about the country’s economic policies and external buffers.
Noting Türkiye’s central bank has begun its monetary easing cycle with two consecutive 250-basis-point cuts to 45%, the international credit rating agency projected a further reduction to 28% by the end of 2025 while maintaining a tight stance to support disinflation.
Fitch estimated that Türkiye’s GDP growth slowed to 2.9% in 2024 and forecasted moderate growth of 2.6% in 2025 due to tight monetary policies, fiscal consolidation and a moderate minimum wage increase.
Inflation remains a concern for the country, though Fitch forecasts it will decline materially to 32.8% in 2025 from 60.2% in 2024.
External buffers have shown improvement, with international reserves rising by $14 billion to $155 billion in 2024. Positive real interest rates, low current account deficits and capital inflows are expected to bolster external buffers, with reserves projected to reach $175 billion by 2026, it said.
The central bank’s net foreign assets also increased, surging to $39 billion in early 2025, supported by reduced financial dollarization, capital inflows and increased external borrowing access.
The current account deficit declined to 0.8% of GDP in 2024 and is forecast to average 1.5% of GDP in 2025-2026, below the “BB” median of 2.4%.
Fiscal consolidation remains a priority, with the central government deficit declining to an estimated 4.8% of GDP in 2024 and projected to fall to 3.3% in 2025 and 3% in 2026, driven by lower earthquake-related spending and increased expenditure discipline among other reasons.
General government debt is expected to remain low at 26.3% of GDP, significantly below the “BB” median of 55.2%.
Fitch last upgraded Türkiye’s rating from “B+” to “BB-” in September, maintaining a stable outlook.
