Fitch’s inflation forecast for Turkey

Fitch predicts that inflation in Turkey will average 58 percent in 2024 and 29 percent in 2025. International credit rating agency Fitch said that Gulf Cooperation Council banks with subsidiaries in Turkey needed to benefit from Turkey’s macroeconomic adjustment and transition to more traditional and consistent economic policies.

According to Fitch, the decrease in inflation will reduce the net monetary losses of subsidiaries and the slower depreciation of the Turkish lira will reduce the negative capital impact from currency translation losses.

The net monetary loss of Gulf Cooperation Council banks’ Turkish subsidiaries was $2.6 billion in 2023.

The statement said, “Assuming Turkish CPI averages 58 percent in 2024 and 29 percent in 2025, we expect the net monetary loss to increase to around $2.8 billion in 2024, then decrease to around $1.4 billion in 2025. If the decrease in inflation continues in line with our expectations and beyond 2025, Gulf Cooperation Council banks will likely stop using hyperinflation reporting from 2027 onwards.”