Mubasher: The International Monetary Fund (IMF) said Turkey is still vulnerable to external and domestic risks, warning that a sustainable expansion could pose a challenge without more reforms, Reuters reported.

“The current calm [in financial markets] appears fragile [while] reserves remain low, and private sector [foreign exchange] debt and external financing needs high,” the IMF said in a statement after an ‘Article IV’ visit to Turkey by its staff.

Turkish economy expanded by an average of over 5% per annum, during the past 15 years, yet inflation and interest rates surged after the lira (TRY) shed 30% of its value last year, while domestic demand tumbled sharply, throwing the economy into recession.

Turkey’s economy shrank by 1.5% in the second quarter of this year, posting the third consecutive annual contraction, yet economic indicators pointed to a recovery as the Turkish currency became less volatile and inflation slowed down.

On a side note, the New York-based lender urged more measures to clean bank and corporate balance sheets to boost financial stability and move from short-run growth focus to sustaining stronger expansion over the medium term.