Turkey plunged into a full-blown currency crisis this month following the imposition of US sanctions and an absence of (or refusal to pursue) an orthodox policy response. Inflation, which was already at a 15-year high, is likely to rise further, and the economy is set for a recession. The banking sector remains a key source of vulnerability. Strains in the sector seem to have eased in the last few days, but banks face large external debt repayments over the next few months which could cause stress.
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