On Friday, January 23, 2026, Fitch Ratings revised Turkey's outlook from "stable" to "positive". At the same time, the agency affirmed the country's long-term foreign-currency issuer default rating at 'BB-'.
The decision to upgrade the outlook reflects a notable decrease in external vulnerabilities, primarily driven by a faster-than-expected increase in foreign exchange reserves since September 2024. Gross FX reserves have risen to $205 billion in mid-January 2026, a significant increase from $155 billion at the close of 2024. Net reserves, excluding swaps, have also recovered, reaching $78 billion compared to a low of -$66 billion in March 2024. This improvement was initially supported by reduced dollarization and capital inflows, and in 2025, by higher gold prices.
Fitch projects that Turkey's gross reserves will reach 4.4 months of current external payments by the end of 2027. While this is a slight decrease from 4.6 months at the end of 2024, it remains below the 'BB' median of 5.1 months. The agency also noted a slight decrease in the proportion of foreign currency and FX-protected deposits in 2025, accounting for 39% of total deposits, a sharp decline from 73% in mid-2023. The FX-protected deposit scheme was successfully wound down.
The international credit rating agency attributed the upgrade to "a further reduction in external vulnerabilities". Fitch highlighted the faster-than-anticipated accumulation of gross foreign exchange reserves. The agency also noted improved reserve quality and a decline in foreign-currency contingent liabilities.
Fitch also pointed to continued tight macroeconomic policies as a supportive factor. Turkey's external financing position is also strengthening, with external liquidity projected to rise to nearly 100% by 2027 from 80% at the end of 2024. This projection is supported by Turkey's sustained access to external financing and a resilient banking sector.
While upgrading the outlook, Fitch also acknowledged that Turkey's external debt maturing over the next 12 months remains high at $224 billion relative to its FX reserves. However, they project external liquidity will improve to near 100% in 2027, from 80% at the end of 2024.
The general government deficit narrowed by almost 2 percentage points in 2025, reaching an estimated 2.9% of GDP. Although Fitch projects the deficit to increase to 4% of GDP in 2027, they expect general government debt to remain stable at around 25% of GDP, approximately half the 'BB' median.
Inflation in Turkey has decreased to 31% from 75% in May 2024. Fitch forecasts inflation to end 2027 at 19.5%, which is still well above target and the highest of any sovereign rated by Fitch. GDP growth is projected to slow by 0.3 percentage points in 2026 to 3.5%, before increasing to 4.2% in 2027, slightly above Fitch's assessment of Turkey's potential.
The ratings affirmation at BB- continues to be supported by Turkey's large, diversified economy and its low level of government debt. The Positive outlook indicates that if current trends in reducing macroeconomic imbalances and building buffers continue, an upgrade to the sovereign credit rating could follow in the future.
