International credit rating agency Moody’s on Friday night, late at night, announced that it had finished a periodic review of Türkiye and has kept its credit rating at “Ba3” with a “stable” outlook. The agency said this July 16 assessment is not an official rating change or a sign of any rating actions in the near future. The country’s creditworthiness remains supported on the back of its size, dynamism and diversification of the economy, as well as its relatively low level of public debt, the review said.

The report pointed out the marked progress in policy implementation since mid-2023. The Central Bank of the Republic of Türkiye (CBRT)’s determination to strictly adhere to a monetary policy framework that aims to actively counter inflationary pressures has been the major contributor to this progress. This approach has helped to solve the macroeconomic imbalances that have plagued the country and has helped to bring confidence back to the Turkish lira among not only domestic depositors, but also foreign investors as well.

In spite of the positive policy changes in the country, the continuous conflicts in the Middle East have made the disinflation process in the country more complex due to increase in global energy prices. However, with these positive domestic policy shifts, the continuous conflicts in the Middle East have complicated the disinflation process in the country due to the increase in the world energy prices. The credit rating agency currently expects inflation to be 29% by the end of 2026, and then to gradually fall to the targeted 24% at the end of 2027.

Over a medium horizon, the country economy is expected to cool a bit, going from 3.6% in 2025 down to 3.4% in 2026, not a huge drop, just a little. Then the expansion should, sort of, regain momentum in 2027. This uptick is attributed to fiscal stimulus that’s expected to be put in place ahead of the elections scheduled for 2028.  

If the authorities keep pushing for effective reforms that ensure macroeconomic steadiness for the long run, while also lowering the exposure to exchange-rate swings and inflationary shocks, and if they also structurally dial down outside risks, it could eventually lead to an upgrade of the credit rating.  

Meanwhile, the agency’s yearly timetable pointed to Jan. 23 and July 24 as assessment dates, but it also said that changes might happen beyond those windows. It added that an assessment date doesn’t automatically translate to any rating action.