Türkiye’s external buffers improve, says Fitch Ratings

ISTANBUL

Türkiye’s external buffers have shown improvement, with international reserves rising by $14 billion to $155 billion in 2024, Fitch Ratings has said.

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 noted.

On Jan. 31, Fitch 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 percent, the international credit rating agency projected a further reduction to 28 percent by the end of 2025 while maintaining a tight stance to support disinflation.

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, according to the rating company.

The current account deficit declined to 0.8 percent of GDP in 2024 and is forecast to average 1.5 percent of GDP in 2025-2026, below the "BB" median of 2.4 percent, Fitch said.

Fitch estimated that Türkiye’s GDP growth slowed to 2.9 percent in 2024 and forecasted moderate growth of 2.6 percent in 2025 due to tight monetary policies, fiscal consolidation and a moderate minimum wage increase.

Fitch last upgraded Türkiye’s rating from "B+" to "BB-" in September, maintaining a stable outlook.