Fitch sees positive shift in Türkiye's outlook amid policy reforms

LONDON, UK - SEPTEMBER 11: Fitch Ratings has revised its outlook for Türkiye from "negative" to "stable" and affirmed its “B“ rating. The credit ratings agency in its assessment released Friday cited a return to a more conventional policy direction as the primary driver, according to Erich Arispe Morales, a senior director in Fitch Ratings' sovereigns group. In an interview with Anadolu, Morales shared insights into Türkiye's economic outlook, highlighting several key factors that have led to a more positive assessment. He outlined the reasons behind the revision, discussed the country's growth prospects, and weighed in on the possibility of an upgrade to "investment grade." He explained that the country has moved away from targeted financial regulations that were perceived as "interventionist and unpredictable." "This refers to reducing the monetary policy rate as the main mechanism to signal the central bank's policy direction. We have also seen that policy is more consistent than before and we have a very mixed policy focused on growth and employment," he said. This shift towards more consistent and growth-focused policies despite previous macroeconomic imbalances has helped stabilize the country's economic outlook, he added. "We can point out also that we have seen some reduction in uncertainty after the elections, given now that the policy direction is clear," he said. Regarding Türkiye's economic growth, Morales acknowledged that the second quarter of the year saw greater policy stimulus due to the general elections. Looking ahead, Fitch Ratings predicts a growth rate of around 4.3% for this year. He said, however, if policy consistency and tighter fiscal measures continue, growth could slow to 3% next year before recovering to approximately 3.4% in 2025. Morales said despite credit pressures have eased due to recent policy shifts, macroeconomic and external financial challenges persist. (Footage by Gokhan Kurtaran/Anadolu Agency via Getty Images)