WASHINGTON (Reuters) - The International Monetary Fund called on Turkey to tighten its monetary and fiscal policies to reduce its external imbalances, which have been exacerbated by capital outflows from emerging markets.
"The market reappraisal of advanced economies' monetary policies has exposed Turkey's main vulnerability — its external imbalance," the IMF said after a mission visit to Turkey.
"In this context and with gross external financing needs projected to remain high over the next few years, a weakening or a reversal of capital flows present a major challenge for the Turkish economy," the Fund said in a statement on Friday.
The IMF said Turkey's current account deficit should widen to 7 percent of its gross domestic product this year and stay that way in 2014, in part due to more gold imports. And inflation should stay above the target of 5 percent this year and next, exacerbated by the depreciation in Turkey's lira.
(Reporting by Anna Yukhananov; Editing by Eric Walsh)