International credit rating agency Fitch Ratings has revised its growth forecast for the Turkish economy, raising it from 2.8 percent to 3.5 percent for this year.
The adjustment comes amid stronger-than-expected economic performance in the first quarter.
In its Global Economic Outlook Report, titled “Monetary Policy Enters a New Phase,” Fitch Ratings highlighted several positive indicators for the Turkish economy, such as a recovery in exports, a significant drop in imports, and sustained robust domestic demand, all contributing to the upward revision.
The revised forecast suggests a more optimistic outlook for the Turkish economy, which is now expected to grow by 3.5 percent in 2024. Looking further ahead, Fitch projects growth rates of 3 percent for 2025 and 3.2 percent for 2026.
However, the report also addresses inflation concerns. Fitch anticipates year-end inflation rates of 43 percent for 2024, 23 percent for 2025, and 18 percent for 2026. These figures reflect ongoing challenges in managing price stability even as the economy shows signs of recovery, it said.
The updated forecasts and detailed economic analysis underscore the complexities of Türkiye’s economic environment, with Fitch noting both the progress made and the hurdles that remain.
Fitch Ratings revised the outlook for the Turkish banking sector from ‘neutral’ to ‘improving’ due to reduced external financing pressures and macro and financial stability risks after Turkey adopted more traditional macroeconomic policies following last year’s presidential elections.
Pointing out that the recent increase in debt issuance by Turkish banks has reduced external financing pressures and international investors have regained their confidence in the sector, Fitch evaluated: “Since Turkey’s policy change, banks’ risk premiums have decreased and access to foreign markets has improved significantly.”
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