International credit rating agency Fitch Ratings has released its latest economic projections for Türkiye, forecasting year-end inflation of 30.5% in 2026 and economic growth of 2.8%.

Fitch’s inflation forecast is above the Turkish government’s latest Medium-Term Program target of 28.4% for the end of 2026.

The agency said stubbornly high inflation expectations and higher energy prices were contributing to persistent price pressures in Türkiye. Fitch also warned that regional geopolitical developments could increase pressure on the country’s external balances.

Fitch expects Türkiye’s economy to grow by 4.3% in 2027. The agency said a gradual easing of policy conditions and lower real interest rates could support economic activity next year.

Energy prices remain one of the main risks highlighted in Fitch’s assessment. The agency expects average oil prices to reach around $87 per barrel in 2026.

According to Fitch, a roughly $20 increase in annual average oil prices could widen Türkiye’s current account deficit by more than 1 percentage point of GDP. This makes energy costs a significant factor for Türkiye’s external financing position.

Fitch also noted a partial recovery in Türkiye’s foreign exchange reserves. Gross foreign exchange reserves had risen to $176 billion as of September 23, while net reserves excluding swaps increased to $45 billion.

The agency said the recovery in reserves, easing depreciation pressures and the continuation of a tight policy mix could help mitigate some of the risks created by higher energy prices.

Fitch’s latest inflation forecast will also be closely watched as Türkiye continues its efforts to restore price stability. Inflation remaining above expectations could continue to create pressure on monetary policy and economic growth.

With its 30.5% year-end inflation forecast for 2026, Fitch expects Türkiye to continue facing significant challenges in its fight against high inflation.

Source: Fitch Ratings, Bloomberg HT, Reuters