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International institutions and foreign investment banks have revised their forecasts for Turkey positively following the new economic administration’s policies and the Turkish Central Bank’s strict monetary and fiscal measures.

While the Turkish Central Bank continues to combat inflation, the economic administration is taking decisive steps toward achieving stable growth.

As a result of the efforts of the Central Bank and economic management, Turkey’s Credit Default Swap (CDS) risk premium decreased from 700 basis points in May to 330 basis points by November 5, reaching its lowest level in 35 months.

These developments have been welcomed by investors and have led to a positive shift in the opinions of international credit rating agencies and investment banks regarding Turkey’s economic future.

Positive Revisions

In its assessment of the Turkish economy, international credit rating agency Fitch upgraded Turkey’s rating from "negative" to "stable" on September 8, marking the first improvement in two years.

Additionally, it raised its growth forecast for Turkey in 2023 from 2.5% to 4.3% and projected a 3% growth rate in 2024 and 3.4% in 2025.

Similarly, Standard & Poor’s (S&P) revised Turkey’s economic outlook from "negative" to "stable" on September 29, citing the shift in economic policies as the reason.

S&P stated that Turkey’s new economic team would be able to rebalance the economy away from debt-financed consumption.

On December 1, S&P further upgraded Turkey’s credit rating outlook from "stable" to "positive", attributing the decision to a significant improvement in the balance of payments, rapid increase in foreign exchange reserves, and a decline in dollarization.

Adjustments in Expectations

The European Bank for Reconstruction and Development (EBRD) revised Turkey’s 2023 growth forecast from 2.5% to 3.5% in its September report and projected 3% growth for 2024.

The United Nations Conference on Trade and Development (UNCTAD) raised its growth forecast for Turkey from 2.6% to 3.7% for 2023 and expected 1.9% growth in 2024.

The World Bank increased Turkey’s 2023 growth forecast from 3.2% to 4.2%.

The International Monetary Fund (IMF) projected 4% growth for Turkey in 2023 and 3.25% in 2024.

Positive Evaluations

In October, J.P. Morgan, one of the largest investment banks in the U.S., advised its investors to increase their share of Turkish lira in their portfolios.

Goldman Sachs stated in its late September emerging markets report that rapid interest rate normalization indicates that the Turkish lira has regained its gains.

Morgan Stanley noted that the Turkish Central Bank's decisions demonstrate a strong focus on combating inflation.

Citibank stated that Turkey’s monetary tightening policy would continue until significant inflation reduction is achieved and emphasized the importance of increasing the appeal of Turkish lira assets.

Germany’s Deutsche Bank mentioned in a November report that Turkish bonds could be among the best-performing emerging market bonds in 2024.

It also noted that the Central Bank's tightening measures exceeded expectations and that its transparency positively impacted the Turkish lira.