Turkey’s Credit Rating Upgraded After 8 Years

Japan-based credit rating agency Rating and Investment Information (R&I) raised Turkey’s rating from “BB-” to “BB” and assigned a stable outlook, citing improvements in macroeconomic management and external balances.

According to the agency, Turkey’s recent return to more conventional economic policies has played a central role in the upgrade.

Authorities have implemented a tight monetary stance aimed at curbing inflation, alongside efforts to restore fiscal discipline and reduce policy unpredictability. These measures have contributed to a gradual rebalancing of the economy, even as growth moderates in the short term.

R&I noted that Turkey’s medium- to long-term growth prospects remain supported by strong domestic demand, a young population, and structural economic potential.

External Position Shows Improvement

The agency also highlighted a marked improvement in Turkey’s external accounts.

The current account deficit has narrowed significantly, supported by stronger exports and a recovery in tourism revenues. At the same time, capital inflows have increased, and foreign exchange reserves have strengthened both in size and composition.

These developments have helped reduce external vulnerabilities, long seen as one of the key risks facing the Turkish economy.

Banking Sector Remains Resilient

Turkey’s financial system continues to demonstrate resilience, according to the report.

The banking sector maintains solid capital adequacy ratios, strong profitability, and relatively low levels of non-performing loans. This has provided a stable foundation for the broader economy during the adjustment period.

On the fiscal side, despite increased public spending following the 2023 earthquakes, authorities are pursuing fiscal consolidation, with the budget deficit expected to decline relative to GDP.

Turkey’s public debt-to-GDP ratio remains low compared to peer economies, reinforcing debt sustainability.

First Upgrade in Nearly a Decade

The latest decision marks Turkey’s first credit rating upgrade in approximately eight years, signaling renewed confidence among international observers in the country’s economic policy direction.

While risks remain—including inflationary pressures and external uncertainties—the upgrade suggests that recent policy normalization efforts are beginning to yield tangible results in the eyes of global rating agencies.