Fitch announces Turkey's credit rating: Critical condition for an upgrade

International credit rating agency Fitch Ratings has affirmed Turkey's long-term credit rating at "BB-" in its latest assessment. The agency maintained the outlook at "stable."

In its statement, Fitch noted that Turkey's low public debt, large and diversified economic structure, higher per capita income compared to other countries in the "BB" rating category, history of maintaining access to external financing during periods of stress, and resilient banking sector are among the factors supporting the credit rating.

The agency assessed the potential growth rate of the Turkish economy at nearly 4 percent. Fitch reported that it expects growth to be 2.8 percent this year and 4.4 percent next year.

Sharing its forecast on inflation, Fitch projected that inflation, which stood at 32 percent in June, would decline to 29.5 percent by the end of 2026.

The statement indicated that the Central Bank of the Republic of Turkey's decision to increase funding costs by 300 basis points and its recent steps to tighten credit limits have supported a partial recovery in international reserves following foreign exchange interventions. Fitch expects gross foreign exchange reserves to reach 167 billion dollars by the end of 2026.

Fitch pointed out that an upgrade in the credit rating could be on the agenda if a sustainable reduction in external financing needs significantly strengthens the country's external buffers and if confidence in the tight policy stance supporting the decline in inflation increases.