Fitch Ratings confirms Türkiye's credit rating at 'BB-', maintaining stable outlook
(MENAFN) Fitch Ratings has affirmed Türkiye's Long-Term Foreign-Currency Issuer Default Rating (IDR) at "BB-" with a "Stable" outlook, signaling cautious optimism about the country’s economic outlook. The rating reflects confidence in Türkiye's economic policies and external buffers, despite challenges. Fitch pointed out that Türkiye’s central bank initiated its monetary easing cycle with two consecutive 250-basis-point cuts to 45 percent and projected a further reduction to 28 percent by the end of 2025, while continuing a tight stance to support disinflation.
Fitch estimates that Türkiye's GDP growth slowed to 2.9 percent in 2024, and it forecasts moderate growth of 2.6 percent in 2025. This slowdown is attributed to tight monetary policies, fiscal consolidation, and a moderate minimum wage increase. Despite these challenges, inflation remains a concern. However, Fitch predicts a significant decline in inflation, forecasting it will fall to 32.8 percent in 2025 from 60.2 percent in 2024.
Türkiye's external buffers have improved, with international reserves rising by USD14 billion to USD155 billion in 2024. Positive real interest rates, low current account deficits, and capital inflows are expected to strengthen these buffers, with reserves projected to increase further to USD175 billion by 2026. Additionally, the central bank’s net foreign assets surged to USD39 billion in early 2025, bolstered by reduced financial dollarization and capital inflows.
The current account deficit narrowed to 0.8 percent of GDP in 2024 and is expected to average 1.5 percent of GDP in 2025-2026, below the "BB" median of 2.4 percent. Türkiye's fiscal consolidation efforts remain a priority, with the central government deficit expected to decline from 4.8 percent of GDP in 2024 to 3.3 percent in 2025 and 3 percent in 2026, aided by reduced earthquake-related spending and improved expenditure discipline.
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