The global fallout from the coronavirus outbreak is turning up pressure on the struggling Turkish economy, which has long been stuck in a roller coaster of domestic and foreign tensions. On March 11, Ankara confirmed its first infection case, with the virus scare coming hot on the heels of war jitters from Turkey's military involvement in Syria.

The rapid spread of COVID-19 from China has badly rattled the global economy, which was already volatile and shaken by Washington’s trade moves against China. While the ultimate human and economic toll of the epidemic remains anyone’s guess, moves to minimize the fallout are spawning “derivative” risks such as the oil price war between Saudi Arabia and Russia. 

Tensions with the Russian-Syrian alliance in Idlib were the leading factor in Turkey’s risk aggregate a few weeks ago, but the coronavirus outbreak is now climbing to the top, mirroring the trend across the world. Its impact on travel and other economic activities was already apparent before Turkey’s confirmation of its first patient, which came quite a while after the virus reached its neighbors, including Iran, the worst-hit country in the Middle East. 

Turkey’s risk premium, reflected in credit default swaps, is a good indicator of how economic and political tensions have affected the country. As recently as Jan. 13, Treasury and Finance Minister Berat Albayrak, who is also President Recep Tayyip Erdogan’s son-in-law, was hailing the drop of the country’s risk premium to 267 basis points, its lowest level since May 2018. “We have achieved an improvement of some 320 basis points since the currency attack in August 2018,” Albayrak tweeted. “Our economic performance in 2019 boosted confidence in our country. We will take this much further in 2020,” he wrote.