Moody’s Upgrades Turkiye’s Credit Rating to Ba3 Amid Policy Reforms and Lower Inflation

Moody’s Ratings has upgraded Turkiye’s long-term foreign and domestic currency issuer ratings from B1 to Ba3, revising the outlook to stable. The upgrade highlights improved economic management, particularly the central bank’s commitment to monetary policies that are reducing inflation and restoring investor confidence in the Turkish lira.

Inflation in Turkiye fell sharply to 35% in June 2025 from 72% a year earlier. Moody’s forecasts inflation will ease further to about 30% by the end of 2025 and drop to around 20% in 2026. The rating agency credited the central bank’s decisive measures, including significant interest rate hikes and tighter liquidity during market pressures in early 2025, for stabilizing the lira.

Turkiye’s external position has also strengthened. The current account deficit narrowed to 0.9% of GDP in the 12 months to March 2025, down from 5.4% in March 2023. Real GDP growth is expected to slow to 2.2% in 2025 from 3.2% in 2024, before recovering to 3.2% in 2026 as reforms take effect.

The stable outlook reflects balanced risks. Continued structural reforms and consistent policy execution could further enhance Turkiye’s external resilience, while any reversal toward unorthodox policies could reintroduce vulnerabilities.

Moody’s also raised Turkiye’s local-currency ceiling to Baa3 and its foreign-currency ceiling to Ba2, signaling improved credit conditions and reduced risk of capital controls. The rating upgrade is expected to bolster Turkiye’s appeal to global investors and support future borrowing efforts in international markets.

This marks Turkiye’s highest credit rating since its policy overhaul, signaling growing optimism about the country’s economic trajectory.