Fitch Ratings revises up Türkiye's to BB- from B+, maintaining stable outlook
(MENAFN) Fitch Ratings announced on Friday that it has upgraded Türkiye's long-term foreign currency issuer default rating to BB- from B+, with a stable outlook. This upgrade reflects significant improvements in the country's external financial buffers and a reduction in contingent foreign exchange liabilities. The agency's positive revision also factors in expectations of declining inflation and lower current account deficits, suggesting a stabilization of Türkiye's economic conditions.
Fitch projected that inflation in Türkiye will end the year at 43 percent, contributing to an average inflation rate of 59.5 percent for 2024. The agency's forecast indicates a gradual decrease in inflation, predicting an average rate of 31 percent for the following year and a further drop to 21 percent by the end of 2025. This anticipated decline is seen as a positive step towards economic stability.
Despite the upgrade, Fitch highlighted concerns about inflationary pressures. The agency warned that a premature relaxation of monetary policy or a departure from the current policy framework—though not anticipated—could potentially reignite inflationary pressures. Such a scenario could pose risks to macro-financial stability and affect Türkiye's balance of payments.
The stable outlook assigned to Türkiye's rating reflects the agency's assessment that the current economic policies and improvements in external financial conditions are likely to be sustained. Fitch's decision underscores the country's progress while also acknowledging ongoing challenges related to inflation and financial stability.
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