The Fitch credit ratings agency has upgraded Türkiye's outlook from "negative" to "stable" and affirmed its "B" rating.

"The revision of the Outlook to Stable reflects the return to a more conventional and consistent policy mix that reduces near-term macro-financial stability risks and eases balance of payments pressures," Fitch analysts said in a note on Friday.

"There is still uncertainty regarding the magnitude, longevity and success of the policy adjustment to bring down inflation, partly due to political considerations."

Fitch forecasted that the Turkish central bank will lift its policy rate to 35 percent by the end of 2023 and remain at that level in 2024 while also noting the "high degree of uncertainty about the future pace and duration of monetary policy tightening".

It said the country's gross international reserves have "noticeably" recovered since mid-May, and forecasted that they will reach $115 billion by the end of 2023 and remain relatively stable in 2024.

No political uncertainty

It also projected Türkiye's growth to reach 4.3 percent in 2023 before slowing to 3.0 percent in 2024.

Fitch noted that "near-term political uncertainty has declined" after the presidential and parliamentary elections in May.

"Post-elections, Türkiye has moved quickly to reduce tensions with NATO allies, signalled its intention to revive the negotiation process for the upgrade of the Customs Union with the EU and continued to rebuild relations with countries in the region," it said, while noting the country's diplomatic role in the war in Ukraine.