Fitch Ratings has affirmed Türkiye’s long-term issuer default ratings at “BB-” with a stable outlook, citing persistent inflation and external financing risks alongside low public debt and a large, diversified economy.
The agency said the rating was constrained by Türkiye’s history of very high inflation, limited external liquidity relative to its financing needs, governance weaknesses and previous political interference in monetary policy that damaged policy credibility.
Supporting factors included low government debt, per capita income above the median for similarly rated countries, continued access to external financing during periods of stress and a resilient banking sector.
Fitch expects inflation to ease from 32 percent in June to 29.5 percent at the end of 2026 and 18 percent by the end of 2028. The rates would remain among the highest across the sovereigns it rates.
The agency warned that elevated inflation expectations increased the risk that sharp policy easing could intensify inflationary, macroeconomic and external pressures.
Economic growth is forecast to slow to 2.8 percent in 2026 before rising to 4.4 percent in 2027. Fitch estimated Türkiye’s potential growth rate at close to 4 percent.
The Turkish Central Bank’s recent increase in funding costs and tighter credit limits supported a partial recovery in reserves following foreign exchange interventions during the early stages of the U.S.-Iran conflict, Fitch said. Gross foreign exchange reserves are projected to reach $167 billion by the end of 2026.
The current account deficit is expected to widen by 1.1 percentage points to 3 percent of GDP this year due to weaker energy and tourism balances.
Fitch’s baseline assumes elections in late 2027 and moderate pre-election stimulus through a lower but still positive real policy rate, temporary fiscal easing and credit incentives. It does not expect a return to unorthodox policies.
A sustained decline in external financing needs, stronger external buffers and greater confidence that tight policies would remain in place to support disinflation could lead to an upgrade, Fitch said.
