Credit rating agency Standard & Poor’s (S&P) raised Türkiye’s long-term sovereign credit rating to BB- from B+ with a stable outlook on Friday.
“The Central Bank of the Republic of Turkiye’s (CBRT’s) tight monetary stance has enabled Turkish authorities to stabilize the lira, bring down inflation, rebuild reserves, and de-dollarize the financial system,” it said in a statement.
“Turkiye’s savings gap with the rest of the world has narrowed, which is visible in the approximately 4 percentage points of GDP decline in the current account deficit since 2022,” it added.
The rating agency said the stable outlook reflects Türkiye’s balanced risks over the next 12 months to authorities’ plans to bring down still elevated inflation, manage workers’ wage expectations and rebalance the Turkish economy.
The stable outlook also reflects the rating agency’s expectation that the current economic team will persevere with tight monetary policy against the implementation risks associated with the government’s medium-term program.
S&P warned that it could lower the ratings if pressures on Türkiye’s financial stability, or wider public finances were to intensify.
The agency said it could raise the ratings, on the other hand, if there would be further progress on bringing inflation down closer to single-digit levels and restoring long-term confidence in the Turkish lira and domestic capital markets.
“Evidence of this would include further de-dollarization of the share of foreign currency deposits in the Turkish banking system, and increased liquidity and depth of domestic capital markets, particularly for foreign exchange operations,” it said.
S&P said it projects real GDP growth easing to 2.3% in 2025, down from 3.1% this year, amid tighter credit conditions and lower labor demand.
Those are expected to be partly offset by stronger exports of goods and services.
The rating agency expects a gradual economic recovery to take hold beginning in 2026.
