Nuran Erkul and Emir Yildirim
21 July 2026•Update: 21 July 2026
The Turkish economy demonstrates its resilience against external macroeconomic shocks despite a highly volatile global environment and regional geopolitical politics, according to a senior Fitch Ratings director.
Following Fitch Ratings’ affirmation of Türkiye’s credit rating at “BB-” and its rating outlook as stable on Friday, Erich Arispe Morales stated that the decision was consistent with the credit rating agency’s unscheduled assessment for the country in April amid the impact of the US-Israel-Iran war.
Morales noted that Türkiye’s international reserves declined during these turbulent times but they had since somewhat recovered.
“We have reserves that have recovered somewhat but remain below the February levels or pre-war levels,” he told Anadolu.
“We have seen that inflationary pressures have also eased somewhat, but of course we are currently in a situation in which still there’s a high degree of political uncertainty which can have implications, of course, not only for Turkey, but for other emerging market in terms of risks of higher energy prices and what that means for inflation, but also for external balances,” he added.
Morales stated that the risks caused by the war continued to beget a high degree of political uncertainty for regional economies.
“However, what we highlight as a positive factor is that, in spite of the increased uncertainty and the decline of reserves, policy settings have been as such to maintain — or at least avoid — a significant reversal in the gains that we’ve seen in terms of inflation dynamics, especially those related to inflation expectations,” he said.
“We have also seen the positive dollarization remains relatively stable at 38% and that the communication we get from authorities at the central bank, but also policymakers in the economic sphere, is that the there is still commitment to the program in terms of bringing sustainable inflation down — after revising the outlook to stable from positive back in April, there’s still an overarching theme of global uncertainty, so we think that there’s resilience in Türkiye, but of course this uncertain geopolitical scenario presents a risk for all emerging markets, including Türkiye,” he added.
Morales stated that while Türkiye’s inflation remained high, signs of slowdowns also continued.
He noted that the above-30% inflation might take some time to slow down, and that it “requires continued commitment and to reveal the policy credibility buffers — that’s an important component.”
Morales emphasized that the healthy banking sector and the capacity to access external financing in Türkiye were helping reduce inflation sustainably, alongside policies, while real interest rates had reached a level that would contribute to the attractiveness of Turkish lira-denominated assets, preventing dollarization.
“I think that one thing is to think about the capacity from the policies over access to financing, the health of the banking sector that gives Türkiye the capacity to withstand external shocks,” he said.
He noted that Fitch was closely monitoring Türkiye’s international reserves as achieving a “durable” improvement was key in a potential credit rating upgrade.
“If combined with external financing requirements, which are relatively high for Türkiye, I think what is important there is the word ‘durable,’” he said.
“And the other (factor) is the maintenance of these policy settings that are sufficiently tight to support a marked decline in inflation over time, as well as reducing the macro imbalance of payment risk — I think this is important to build this confidence in an environment that can see external shocks and political pressures or uncertainty,” Morales added.
Morales stated that the Turkish Central Bank considered high geopolitical risks and pressure on energy prices when determining the extent of monetary policy easing, expecting some dovish policy later this year, based on the assumption that geopolitical risks would ease, and energy prices would decline.
“We have an average of $87 per barrel of Brent this year and that’s consistent of some easing later in the year, which takes us to end-2026 policy rate of 35% — that’s 200 basis points below what the current level,” he added.
