Political turbulence and market volatility heightens Turkey’s external vulnerability while large external imbalances render the Turkish economy vulnerable to a decline in foreign capital inflows, Moody’s said on Tuesday.

The effects of market volatility associated with QE tapering have been amplified by domestic political turbulence, heightening Turkey’s external vulnerability, Moody’s stressed. The maturity structure of the country’s external debt, a third of which is short-term, and dependence on the mostly short-term nature of capital inflows could potentially heighten the risk of a hard landing, the rating agency said.

However, the government’s own balance sheet remains a credit support, and fiscal policy is expected to able to absorb some of the shocks to the economy, according to Moody’s. The absolute amount of foreign-currency debt is relatively low at 13% of GDP, and the sensitivity of the government’s debt to possible changes in interest rates is being reduced via ongoing efforts to lengthen its domestic and external debt profile to average maturities, Moody’s noted. Moody’s rates Turkey at Baa3/stable.