Fitch’s forecast for Turkey: 2025 will continue to be a period with high inflation

Fitch Ratings’ Turkey analyst, Erich Arispe Morales, predicts that Turkey’s economy will continue to experience high inflation in 2025.

Morales noted that Turkey was in a transition from a domestic demand-driven growth model to one supported by net exports. Although inflation is expected to decrease, tight monetary policy will remain in place until the first quarter of 2025, with gradual easing anticipated thereafter.

Additionally, Fitch has upgraded Turkey’s credit rating from “B+” to “BB-” and maintained its outlook as stable. Morales emphasized their strong confidence in Turkey’s tight monetary policy. While inflation expectations are expected to improve, the sustainability of this process requires maintaining a tight monetary stance.

ECONOMIC GROWTH IN 2025 TO SLOW DOWN TO 2.8 PERCENT

In 2025, Turkey’s economic growth is expected to be driven by net exports, with growth projected to slow to 2.8%. Fiscal policy is also expected to play a key role in combating inflation, contributing to its decline by 2025.

Fitch also forecasts Turkey’s international reserves to increase to $158 billion by the end of this year and $165 billion by 2025. Morales noted that Turkey’s economic vulnerabilities were beginning to improve, but the country will remain fragile unless inflation sees a sustained decrease.