Moody's upgraded Turkey to investment status last month, citing a fall in public debt to 36pc of GDP, a shift from foreign currency to lira debt, and a lengthening in debt maturity to 4.6 years, as well as a shift to nuclear power to reduce energy imports.
But the agency also said a "the sudden and sustained halt in foreign capital flows" could tip the country back into the junk debt category. Spain and Ireland also had very low public debt levels before tipping into crisis, dragged down by the excesses of their banks and developers.
Capital Economics said Turkey could equally find itself "on the hook" for the large foreign debts of its companies if there were an external shock. Mr Jackson said Turkish lenders are more exposed than in 2008 before the Lehman crisis.
The external debt of the banks has risen from 8pc to 14pc of GDP, the highest in more than 20 years. Roughly 70pc of the loans have to be rolled over during the next 12 months and the loan-to-deposit ratio now exceeds 100pc.
"We're not forecasting a banking crisis, but vulnerabilities could lead to an economic hard-landing down the road," he said.... Economics commentator Ugur Gurses told The Wall Street Journal that trouble was brewing even before the protests, and could now snowball.
"We could see significant capital outflows," he said.
Ugur Gurses said economic analyst said while problems had deteriorated ago the demonstration began to the Wall Street Journal could, grow with this snowball. "See the massive capital outflow could be"
