International credit rating agency Moody's on Wednesday upgraded its year-end growth forecast for Turkey in 2017 from 2.6 percent to 3.7 percent.

The U.S. based agency's report titled "Global Macro Economic Outlook" said that Turkey's economy continued to improve in the first half of 2017, which followed the acceleration in growth in the last quarter of 2016. It also kept its forecast for 2018 at a lower rate at 3.2 percent.

Moody's cited the rise in the number of tourists from Russia and Israel, incentives such as tax cuts and loan deposits, and the increase of exports to the European Union as the reasons for higher growth than expectations.

The report noted that domestic tensions have decreased after the referendum in April and the Turkish lira has stabilized following fluctuations early in the year.

However, the Moody's forecast is still significantly lower than the government forecast of 4.4 percent and Fitch Ratings' forecast of 4.7 percent.

The average growth for G20 economies are expected to rise to 3 percent in 2017 and 2018 from 2.6 percent recorded in 2016, it added.

Moody's downgraded its U.S. growth forecast from 2.4 percent to 2.2 percent for 2017 and from 2.5 percent to 2.3 percent for 2018.

Whereas it upgraded the growth forecast for China from 6.6 percent to 6.9 percent in 2017 and from 6.3 percent to 6.4 percent for 2018. France was another country where Moody's expects a stronger growth than its earlier prediction, which was revised to 1.6 percent from 1.3 percent.

The agency cut its growth forecast for developing markets such as India, Saudi Arabia and South Africa.