S&P's assessment on Turkey's credit rating and economic outlook

International credit rating agency S&P affirmed Turkey's current "BB-/B" credit rating and "stable" outlook. Describing the publication of the evaluation after the scheduled date as a routine practice, S&P Turkey Lead Analyst Karen Vartapetov stated that a decline in inflation alone would not be sufficient for a rating upgrade, and that the strengthening of Central Bank reserves and the ensuring of continuity in economic policies will be decisive.

S&P estimates that the Turkish economy will grow by 3 percent in 2026 and 3.7 percent in 2027. Despite the pressure of conflicts in the Middle East on energy costs, it is stated that the weakening in domestic demand limits price increases. The institution forecasts that room for a rate cut may emerge by the end of the year and that the policy rate could finish the year at at least 35 percent.

Assessment: The institution's view that low double-digit inflation is more realistic than single-digit inflation indicates that the process of returning to price stability will take time. Inflation is expected to realize at 30.9 percent in 2026 and 21.7 percent in 2027.

Stating that no strong negative impact spreading across the broader economy was observed during the fund liquidation process, Vartapetov evaluated the capital exiting assets flowing into Turkish lira deposits as a reassuring development. However, it was emphasized that it is still early to reach a definitive judgment on the process and that maintaining investor confidence is of critical importance.