Fitch Upgrades Turkey’s Outlook to Positive, Affirms Credit Rating at BB-

Fitch Ratings has revised Turkey’s sovereign credit outlook to Positive while affirming its long-term foreign-currency rating at BB-, citing a faster-than-expected buildup of foreign exchange reserves that has helped ease the country’s external vulnerabilities.

The decision, announced late Friday, reflects growing confidence in Turkey’s macroeconomic trajectory after years marked by currency crises and policy uncertainty. Despite the improved outlook, Turkey’s rating remains firmly within speculative, or non-investment-grade, territory, three notches below investment grade.

Fitch pointed to the rapid accumulation of foreign currency reserves as a key factor behind the outlook upgrade. The agency noted that stronger reserve coverage has reduced external financing risks for an economy historically exposed to sharp capital flow reversals and exchange-rate volatility.

The revised outlook signals Fitch’s belief that recent economic adjustments are beginning to stabilize Turkey’s external position, even as challenges persist.

Turkey’s current BB- rating represents a notable recovery from its lowest point of B in mid-2022, when Fitch cited surging inflation and policy credibility concerns. The latest move follows a series of incremental improvements over the past two years, reversing part of a prolonged downgrade cycle.

Fitch had previously stripped Turkey of its investment-grade status in early 2017, following heightened political risks and weakening economic fundamentals. The downgrades accelerated during 2018 and 2019 amid a sharp depreciation of the lira and persistently high inflation.

By July 2022, Turkey’s rating had fallen to B with a negative outlook, underscoring concerns over macroeconomic stability and policy direction.