Fitch Ratings Announces "Neutral" 2026 Outlook for Turkey's Finance and Public Sectors

Macroeconomic Stability and Risks International credit rating agency Fitch Ratings has released its 2026 projections for Turkey’s financial system and public sector.
Following the revision of the country's rating outlook to "positive" in January, the neutral outlook set for 2026 is based on expectations of a balanced economic course.
However, the report warned that the upcoming election process could pose a potential risk to the continuity of economic policies.
Expectations in the Banking and Finance Sector In its analysis of the banking sector, Fitch noted that funding conditions have improved and deposit dollarization has declined.
Nevertheless, the weakening of asset quality is expected to continue into 2026, though it is anticipated to remain at a manageable level.
The gradual removal of regulatory flexibilities is projected to lead to a decrease of 170 to 200 basis points in banks' capital adequacy ratios.
Leasing, Factoring, and Insurance Sectors Different dynamics are emerging in other financial sectors.
In the leasing sector, the decline in inflation and interest rates, along with access to foreign currency funding, are viewed positively.
Conversely, in the factoring segment, increased competition with banks is expected to slow down growth rates.
In the insurance sector, strong premium production and investment income are expected to support profitability.
However, structural pressures in motor third-party liability insurance are projected to persist.
Public Sector and Local Governments Fitch Ratings reported that the resilient performance of local governments and the state support provided to public entities reinforce the neutral outlook.
It was emphasized that while inflation continues to put pressure on expenditures and budget deficits, economic growth will play a balancing role on the revenue side, helping to maintain fiscal discipline.