Fitch Ratings kept Türkiye's credit rating where it was on 17 July, at BB- with a stable outlook, and the more telling part of the decision was the gap it left open. Fitch's own model scored the country a notch higher, at BB+, up from BB at its last review, and the ratings committee then took two notches back by hand before settling on BB-. The machinery said the credit was improving. The people running it were not ready to agree.
Their reasons were inflation and the war. Fitch still expects consumer prices to rise 29.5% by the end of this year, easing from 32% in June, and it called that the highest inflation of any government it rates. On the war, the agency was blunt about the cost: the fighting between the United States and Iran drove large interventions to defend the lira, and gross foreign reserves will end 2026 near $167 billion, almost $45 billion below where they stood before the war, though about $17 billion up from a low point in March. The central bank's move to raise its funding cost by 300 basis points and tighten credit, Fitch said, was what pulled reserves partway back.
Fitch would not treat any of that as a passing squall. It shaved one notch off its model score for Türkiye's long record of political interference in monetary policy, the kind that has ended in dollarization and capital flight before, and a second notch for external accounts that stay thin against the country's financing needs. Net reserves, stripped of swaps, sit at about $43 billion, better than the deep hole of 2024 but still a slim cushion for an economy with $242 billion of foreign debt falling due over the next year.
The rating also rests on real strengths, and Fitch named them. Government debt is low and staying low, headed for about 25% of national output by 2028, less than half the average for countries in Türkiye's rating group. The economy is large and diversified, per-capita income sits above that peer group, and the banking sector has held. Growth cools to 2.8% this year, Fitch expects, then picks back up to 4.4% in 2027.
For the country the message is a mixed one, and worth reading plainly. Türkiye is three notches below investment grade, and the door to a better rating is the same one that has been open for a while: build the external buffers up and keep them there, and hold policy tight enough to bring inflation down for real. Fitch expects an election pulled forward to late 2027 and flags the political risk that comes with it. It also offered a line the government will not mind hearing, that through the war Türkiye has "effectively balanced" its foreign relations, and that its ties with Washington have improved.
The rating stays put. The argument over which way it moves next is already under way.