Moody’s Ratings has completed its periodic review of Türkiye’s credit ratings, reaffirming the government’s long-term issuer rating at B1 with a positive outlook.
The review reflects improvements in Türkiye’s economic and monetary policies while highlighting ongoing structural vulnerabilities and institutional challenges.
The report commends Türkiye’s resilient and diversified economy, which has shown signs of stabilization following recent policy shifts.
Inflation, which peaked at 75.4% last May, declined significantly to 44.4% by December. Moody’s forecast inflation to drop to 30% by the end of 2025 as disinflationary measures take effect.
The tightened monetary policy, a cornerstone of recent reforms, has been credited with curbing domestic credit growth and bolstering confidence in the Turkish lira.
The measures have also contributed to reducing inflationary pressures and narrowing the current account deficit. The deficit shrank to 0.7% of GDP in the 12 months to September 2024, down from 3.6% in 2023, aided by reduced imports of gold, lower energy prices and strong tourism revenues.
Moody’s highlighted the importance of Türkiye’s return to more orthodox economic policies but warned that sustaining improvements requires consistent reforms. Institutional concerns, including the concentration of executive power and potential risks of policy reversals, continue to weigh on Türkiye’s credit profile.
The positive outlook suggests that Türkiye could achieve an upgrade if inflation is reduced sustainably, economic rebalancing efforts are maintained, and structural reforms bolster institutional effectiveness.
Moody’s also underlined the importance of reducing external vulnerabilities, such as reliance on energy imports and sensitivity to currency fluctuations.
The agency cautioned, however, that any reversal to credit-driven growth policies or stalled progress on disinflation could undermine recent gains and lead to a stable outlook.