Government finances in Turkey and Argentina are much worse than most other EMs, which have improved significantly since the ‘taper tantrum’ in 2013, when the US Federal Reserve first announced it was tapering its bond-buying programme. Notably, Turkey has a large current account deficit, a substantial amount of external debt maturing in the next 12 months, and inadequate official reserves.
The country relies on the kindness of strangers to meet its immediate need for foreign funding (figure 3). Only two others (Pakistan and South Africa) in the 20 major EMs we follow rely on short-term foreign financing. Even the more fragile economies of Brazil, South Africa and Russia don’t.